Tesla CEO Elon Musk shocked investors when he tweeted to his 22.3 million followers on Tuesday suggesting the electric vehicle maker could go private at $420 per share, while noting, "funding secured".
Gerber Kawasaki CEO Ross Gerber and FBN's Hillary Vaughn on how Tesla CEO Elon Musk tweeted that he may take the company private. And if the information in the tweet isn't true, Musk could be looking at some stock price manipulation allegations.
Musk and his luxury automaker have been under enormous pressure to overcome repeated delays and deliver on promises of producing 5,000 of Tesla's more affordable Model 3 cars per week. Taking Tesla's shares out of public markets would make it much more hard for people to engage in short selling of Tesla's stock.
That is what the Tesla Inc. chief executive said in announcing an audacious plan to take his $60-billion-plus auto maker private. With approximately 170 million outstanding shares, Musk's proposed privatization of the company at $420 per share would require $71.4 billion, about a 17 percent increase.
Despite its challenges, Tesla has remained a favourite among many investors, partly due to their faith in Mr Musk, who made his initial fortune as a co- founder of PayPal and also is the chief executive of a trail-blazing aerospace company, SpaceX, that's already private. That said, if they do want out, they can sell their shares at $420 per share, which is a fair bit higher than Tesla's current stock price ($382.67 at the time of writing, up from today's open price of $343.84).
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Going private would reduce the market pressure on Tesla, especially from short sellers who believe Tesla is set up to fail and are pursuing strategies to profit from Tesla's troubles.
It was not clear if Musk was serious as he has a history of erratic tweets, and the company did not immediately respond to request for comment.
Earlier, it was learned that Tesla had secured a $2 billion investment from Saudi Arabia's sovereign wealth fund. In a public letter posted to Tesla's official website, Musk elaborated on his intentions to privatize Tesla - at least in the short-term.
Tesla's shares were up 6.5% at $363.46.
Musk's target for taking the company private would value it at more than $82 billion, according to Bloomberg.
We reached out to Tesla to find out what this all means and will update when we hear more.
Finally, this has nothing to do with accumulating control for myself.