Elon Musk explains why he's thinking about taking Tesla public

Ivan Schwartz
August 8, 2018

TESLA CEO Elon Musk has laid out his rationale for possibly taking the company private, saying the move would free the electric auto maker to focus on long-term goals, rather than the quarterly concerns of Wall Street.

Musk said the plan being put together would allow shareholders either to remain owners of the private company, or to sell their current positions at $420 per share. He claims Tesla is the most shorted stock "in the history of the stock market" and that going private would remove them from the narrative.

But former SEC Chairman Harvey Pitt told CNBC he saw problems with Musk's tweets, noting that the mention of a go-private price is "highly unprecedented ... and raises significant questions about what his intent was".

The furor over Musk's tweets has led to a halt on $TSLA trading. He says the move could be structured so that so that all shareholders will have a choice to remain investors in the private company or sell their stock for $420 (£324.58 / €362.11) per share. The company had a market value of $58 billion as of Monday's close. I own about 20% of the company now, and I don't envision that being substantially different after any deal is completed.

That could lead to a short squeeze - where bearish traders are forced to buy shares to avoid big losses, pushing the stock higher - Dusaniwsky said.

If Mr Musk decides against going private, Mr Gordon said his credibility could take another hit, though one he could weather.

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Following the company's surge after last week's earnings, Musk took aim again at a short-seller in a reposted short YouTube video that likened these investors to Hitler's last days. I think he's serious. "Plus this is short squeeze rocket fuel after a nice quarter", said analyst Chaim Siegel from Elazar Advisors.

Trading resumed at 3:45 p.m., with the stock peaking at $387, not far from the company's intraday record of $389.61. The company with the highest short interest among any American firm has been criticised for burning through cash. He added: "I can't believe this is something to bluff or make fun of".

He also said that he would hold on to his almost 20% stake in the company if it were taken private, and that he wouldn't expect himself or any other investor to have a controlling vote after the buyout. The Financial Times, citing unnamed people with direct knowledge of the matter said Saudi Arabia's Public Investment Fund had built a stake of between 3 and 5 percent of Telsa's shares.

Tesla has been publicly traded since 2010, and has seen its share price rise from just under $20 then to $360 at time of writing.

Other reports by GizPress

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