Elon Musk 'Considering' Tesla Buyback at $420 to Take Company Private Again
08 August, 2018, 04:57 | Author: Brooke Harris
Why would Musk want to take his company private?
Marketwatch now lists Telsa's market cap at a little over $US58 billion ($78 billion).
"The short position is the best thing the stock has going for it. "Musk vs The Shorts" is a far better narrative than 'Tesla vs Mercedes/Audi/Porsche, '" Chanos said.
Musk went on to claim Tesla is the "most shorted stock in the history of the stock market" and this means there are "large numbers of people who have the incentive to attack the company".
Musk said he will give shareholders a choice: either remain investors in a private Tesla, or sell their stock for $420 per share - a 20 percent premium over the price at the time ofthe company's recent quarterly earnings call.
A leveraged buyout of Tesla, which went public in 2010 on Nasdaq and which sports a market capitalization of almost $64 billion, or other take-private transaction would represent an abrupt change in financial strategy.
A spokesman for Tesla did not immediately return a request for comment.
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Shortly after, the company posteda longer statement from Musk, in which the CEO revealed it is a serious plan, although he stressed "a final decision has not yet been made" on the proposal.
Earlier in the day, the Financial Times reported that Saudi Arabia's sovereign wealth fund, overseen by Crown Prince Mohammed bin Salman, has built an undisclosed stake of between 3 and 5 per cent stake in Tesla.
"Tesla's volatility makes it more of a trading stock than a value play", said Ihor Dusaniwsky, head of research at S3 in NY. The company had a market value of $58bn as of Monday's close. But he says any deal would be structured so that shareholders could opt to remain investors or be bought out at $420 per share.
In his blog post, Musk emphasized that the intention was not to merge SpaceX and Tesla, a strategy that some have speculated about in the past.
Going private is one way to avoid the intense scrutiny of public markets. If Musk were to make good on his tweet, it is unclear from where he could secure funding to buy out Tesla's shareholders.
He implied that the funding values the company at $420 a share. Musk has vowed that the company will start turning a regular profit in the second half of this year. They would continue to have separate ownership and governance structures. Those who stay onboard would be able to sell shares or execute stock options approximately every six months.
"This has nothing to do with accumulating control for myself", he said.
His US$12b Tesla stake would presumably be rolled into the private enterprise. Either way, the future is very bright and we'll keep fighting to achieve our mission.
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Elon Musk says he's considering taking Tesla private
In a second tweet on Tuesday, Mr Musk said taking the company private would not lead to a single dominant shareholder. A tweet from Tesla boss Elon Musk's account suggests he is "considering" taking the electric vehicle firm private.
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