Published: Wed, August 08, 2018
Business | By Eloise Houston

Elon Musk announces he's considering taking Tesla private

Elon Musk announces he's considering taking Tesla private

Shares in Tesla climbed 6.8 per cent to US$365.36 at 1.47pm Tuesday in NY (4.47am Wednesday, NZT), putting his fortune above US$25 billion after the company's co-founder tweeted that he's considering taking the electric-carmaker private at US$420 a share.

The BBC has been unable to verify the post was written by Mr Musk himself, but it has pushed the shares 6% higher.

"There's a lot of noise that surrounds a public company and people are constantly commenting on the share price and value", Musk said in 2015.

No matter if he was joking or not, as soon as Musk tweeted about this, the stock spiked.

Mr Musk's statement came at a time when the electric vehicle maker faces financial constraints, and barely a week after the company announced it had made its biggest net loss to date of $717.5m (£547.6m) during the second quarter ending in June.

His tweet came hours after the Financial Times reported that Saudi Arabia's sovereign wealth fund had built a significant stake in Tesla Inc., but it was unclear if that was the funding Musk was referring to. Musk owns almost 20 percent of the company. In a May earnings call, Tesla shares slipped after Musk derided "boring, bonehead" questions from analysts regarding the company's finances.

The company's shares rose more than 7% on the news, before Tesla trading was halted. Tesla has always been one of the most-shorted stocks on Wall Street, but so far, the company has not seen the share-price meltdown that shorts expected.

"The market doesn't believe him", said David Kudla, the CEO of Mainstay Capital Management, which is betting against Tesla.

He shared more details in a series of Twitter replies, noting that should Tesla go private, he'd remain in his role as founder and CEO of Tesla.

In an interview with Bloomberg News in January 2015, he spoke of the benefits of running his closely held rocket company Space Exploration Technologies Corp. and his frustrations with having taken Tesla public in June 2010. I wanted to let you know my rationale for this, and why I think this is the best path forward.

With shares at $369.90, short-sellers logged an on-paper loss of $977 million, according to financial analytics firm S3 partners.

In a 2013 report, the SEC said companies can use social media outlets to announce important information, so long as they comply with regulations and "investors have been alerted about which social media will be used to disseminate such information".

"I can't believe this is something to bluff or make fun of".

Like this: