Elon Musk says going private is 'best path forward' for Tesla | Tesla | Elon Musk | Tesla motor
Elon Musk says going private is 'best path forward' for Tesla | Tesla | Elon Musk | Tesla motor
Elon Musk's latest big idea is daring even by his standards: He wants to turn Tesla into a private company.
He stunned investors on Tuesday with a tweet saying he had already lined up the funding, and he told employees that it would relieve the electric car company of the "enormous pressure" of Wall Street's expectations.
in a letter to Tesla workers that was posted on the company's blog, Musk called his idea the "best path forward."
"As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders," he wrote.He also said trading its stock publicly "means that there are large numbers of people who have the incentive to attack the company." Musk has complained repeatedly about short-sellers, who profit when Tesla stock drops.
Musk, the CEO and largest shareholder, said on Twitter that the private funding valued Tesla at $420 per share. Tesla is already the most valuable automaker in the United State.
The firm subsequently shared a message from Mr Musk to employees that explained the thinking behind his announcement.
Mr Musk, who owns almost 20% of the company, said he hoped the move would shield the firm from distracting swings in the share price and the pressure to meet quarterly financial targets.
He also said he wanted to end "negative propaganda" from short sellers, investors who bet on the shares of a firm going down.
"Basically, I'm trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible," he wrote.
Mr Musk has discussed the drawbacks of being a public company before. But his tweets stirred confusion initially, given his history of informal use of the social media service.
For example, on April Fool's Day, he joked on Twitter about Tesla going bankrupt.
Largest deal ever?
If Tesla were taken private at $420 per share, it would be one of the largest such transactions in history - a deal worth more than $80bn, including the firm's debt.Mr Musk's plan would allow investors to choose to retain their holdings. He planned to hold onto his shares and hoped to continue as chief executive, he added.
Gene Munster, an analyst at Loup Ventures, said Mr Musk had a "one-in-three chance" of managing to succeed with his plan.
"The 16% premium to the current share price may not be high enough to incentivise existing shareholders to support the sale," he added.
I don’t have a controlling vote now & wouldn’t expect any shareholder to have one if we go private. I won’t be selling in either scenario.
My hope is *all* current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment.
Analysis by Kim Gittleson in New York
Elon Musk has had a difficult relationship with stock market investors - and been particularly angered by so-called short sellers, who have made record bets on the ultimate collapse of Tesla.On Tuesday, those same short sellers were threatened with big losses after he tweeted that he was considering taking the electric car maker off the market and back into private ownership.
The messages sent the share price surging. But it bears noting that Mr Musk is known both for his erratic outbursts and for his quirky sense of humour.
Both have been frequently on display as Tesla has struggled to hit production targets. That's briefly left some wondering if this is all just another way of turning attention away from the fact that Tesla has yet to turn a profit.
Mr Musk's disclosure stirred further speculation about Tesla's future.
The firm is spending heavily as it ramps up production of its latest car, the Model 3.
It reported a record loss in its most recent quarter, and some analysts say it will need to raise money in order to survive.
However, Mr Musk has said he has no plans to do so and promised that the firm will be profitable in the second half of the year, barring any unforeseen events.
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