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Musk says going private would free Tesla

08 August 2018

"Funding secured", Musk tweeted at 12:47 p.m. - with Tesla shares trading hands at about $356.67.

Before its recent rally, Tesla's share price had been in a downward spiral for much of the summer, as the company struggled to meet production targets for its midrange Model 3 sedan.

Mr Musk has previously discussed the drawbacks of being a public company, saying shareholder demands often produce short-term thinking.

He has frequently lambasted "short" sellers of Tesla shares - those who take bets that the stock will fall in value.

Musk said in subsequent tweets that he would remain chief executive under a go-private transaction and that any deal would benefit shareholders.

The gains added to upward movement on the stock after The Financial Times reported earlier that a Saudi Arabian sovereign wealth fund had built a stake of between three and five per cent in the company.

Musk has also clashed repeatedly with critics, especially investors who have taken short positions on the stock, meaning they benefit when the price falls.

VideoJamie Albertine, Consumer Edge Research senior automotive analyst, discusses Tesla Inc.

Musk's tweets, though, might present a bigger problem.

"Tesla's volatility makes it more of a trading stock than a value play", said Ihor Dusaniwsky, head of research at S3 in NY. That baseless tweet was quickly deleted and Mr Musk apologised to the diver. The numbers from the report indicate that the PIF, which has more than $250 B in assets, has a stake of between $1.7 B and $2.9 B at Tesla's current share price.

It's highly unusual for the head of a major company to make a significant announcement in such a casual manner.

Mr. Musk could also face scrutiny by the U.S. Securities and Exchange Commission if his tweet turned out to be a joke. "This is not how you do it and it makes you wonder how seriously to take it", said Erik Gordon, a business and law professor at the University of MI.

Musk views short sellers as people who don't understand his company [.] It's similar to the relationship between Trump and the media.

Betting against Elon Musk has never been for the faint of heart.

Tesla shareholder Quint Tatro, managing director of Joule Financial, praised the idea as "brilliant", adding that "Musk is exhausted of dealing with all the challenges of being 'public'". Trading in Tesla's stock resumed shortly after the letter's release, and the stock climbed 11 per cent to close at $US379.57. (Musk said in his Tesla blog post that he held a 20 percent stake.) He said that if the plan goes forward, shareholders would cast the deciding vote.

Yes, Elon Musk is serious about wanting to take Tesla private for $420 a share. The company underwent an initial public offering in 2010.

And yet it also left many questions unanswered, namely how Musk - who owns nearly 20 percent of the company - would be able to come up with the $66 billion necessary to complete the transaction. He shared in a tweet that the move would insulate the company from some of the distractions that come with being a publicly traded company.

Tesla stock had closed on August 6 (the previous day) at $341.99. Either they can stay investors in a private Tesla or they can be bought out at $420 per share, which is a 20% premium over the stock price following our Q2 earnings call (which had already increased by 16%).

Musk says going private would free Tesla