Published: Wed, August 08, 2018
Money | By Wilma Wheeler

Elon Musk tweets he may take Tesla private

Elon Musk tweets he may take Tesla private

Tesla shares were halted for about an hour today following Musk's tweets, with some questioning whether the public statements violated trading laws.

Elon Musk has "surprised" the market by laying out a tentative plan to privatise the now publicly listed Tesla electric car/solar energy company with a $420 per share price offer. They closed at $379.57 - up 11 percent, but far from the $420 price Musk was dangling.

Soros Fund Management LLC took a $35 million stake in the 2019 Tesla convertible bonds in May of 2018.

Former SEC chairman Harvey Pitt spoke up about the matter to CNBC, noting that Musk's tweet "might constitute fraud if any of the facts he disclosed are not true" or if there's any indication that his tweet was sent for the goal of boosting Tesla's stock price by soliciting investor hope.

The tweets have added to speculation about Tesla, which is spending heavily as it ramps up production of its latest vehicle, the Model 3.

Tesla is the most valuable automaker in the United States, and Musk's fights with investors - specifically short-sellers, who profit when the stock drops - are a running Silicon Valley sideshow.

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.

At $420 per share, a deal would represent a 23 percent premium to Tesla's closing price on Monday.

He also said he would not sell his stake.

Tesla has been the subject of a number of short sales by investors - who feel the money-losing company doesn't have a path to profitability and that its shares will tumble.

The Public Investment Fund, or PIF, acquired shares in Tesla over the last few months as part of its wider investment strategy, according to a person familiar with the transaction. At the time, Tesla shares were trading at about $360 per share and went as high as $371.15 before giving back gains later in the afternoon.

VideoElon Musk says he wants to make Tesla Inc. a private company.

In the letter, Musk lays out several reasons prior companies have left the public sphere: The quarterly earnings reports that may distract from a long-term picture, and scrutiny from short sellers. "Funding secured", he said on Twitter.

One block of 714 Tesla call options, betting on the shares rising above $365 by the end of the week, were bought for 85 cents, for a total outlay of $60,690.

The Wall Street regulator did not immediately respond to a request for comment on Musk's tweet. To take it private, the billionaire would have to pull off the largest leveraged buyout in history, surpassing Texas electric utility TXU's in 2007.

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.

Musk has every incentive to try to either drive up the stock price or eliminate the need for public reporting on sales and finances by taking the company private.

Musk was clear in his email that a final decision has not been made, and, come to think of it, it's not even clear if this move would be possible.

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