Tesla wants to go private

08 August, 2018, 04:27 | Author: Billie Castillo
  • Tesla CEO Elon

Before Musk's tweet, Tesla had a market value of $58 billion, already higher than that of General Motors or Ford, even though those companies are significantly larger and more profitable. He also said he intends to give Tesla's existing shareholders the option of retaining a stake in the company through a special fund, if they want.

Tesla's CEO also laid out what he envisions as the ideal path for going private.

He said funding had been secured and that he would stay on as chief executive if the company went private. He later tweeted that the only uncertainty about completing the deal is whether he can gain shareholder approval.

Musk's tweet came nearly simultaneously with a new report from the Financial Times that revealed for the first time that Saudi Arabia's Public Investment Fund has been quietly buying up about five per cent of the electric vehicle company over the last few months to the tune of $US2 billion ($2.7 billion). Employees would remain shareholders, and Tesla would be independent of Musk's other company, Space X, though the structures would be similar.

Whether Musk's tweet was ethically proper or not, all of the experts interviewed by FOX Business agree the move was unprofessional at best.

The firm's shares climbed more than 6% after the tweet, but the Nasdaq later halted trading pending an announcement.

Did Elon Musk violate any securities regulations, particularly Reg FD [Fair Disclosure], which according to the Securities and Exchange Commission, prohibits selective disclosure of material information? "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.

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Yes, Elon Musk is serious about wanting to take Tesla private for $420 a share.

Musk, who has previously discussed possibly taking Tesla private, has had bumpy relations with Wall Street, often dismissing questions over financing.

A short squeeze is a trading scenario that occurs from time to time in heavily shorted stocks, when bearish traders are forced to buy shares to avoid big losses - something that ends up pushing the stock higher. Musk has vowed that the company will start turning a regular profit in the second half of this year.

The SEC has brought charges in the past in at least one case in which a man was accused of manipulating stock prices with false tweets and taking advantage of the reduced prices.

Second, my intention is for all Tesla employees to remain shareholders of the company, just as is the case at SpaceX. Tesla lost another $717.5 million in its most recent quarter. The stock rallied 11% on the day, burning short sellers, who Musk has publicly blasted, to the tune of $1.32 billion per S3 Partners and sending many investors scrambling.

Tesla has been public since it filed an IPO in 2010.

Only Toyota and Volkswagen would be worth substantially more than Tesla, which is now the world's fifth biggest automaker by market capitalization. "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". Regulators temporarily halted trading as pending news from the company swirled.

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