Markets

Elon Musk recently announced he is considering taking Tesla private

Elon Musk recently announced he is considering taking Tesla private

It now has a market value of $61 billion, and at a share price of $420, the company would be worth around $71.6 billion. On an earnings call, he said that it was time to let the cat out of the bag, and confirm that the project had been in semi-stealth mode for the past two to three years. "That's obviously an incredibly large valuation to somehow take into the private market". According to analysts, whoever decides to buy Tesla at $420 a share would be "clearly someone who wants a majority (or a very large stake)", in the company, leaving only a few entities with enough cash to back the purchase up.

"If you are a believer in Elon, I would continue to hold onto those shares", said Michael Jurasic, a securities attorney at Ropes & Gray, who added that it's unclear exactly how Tesla's buyout would work. The fund owns between 3% and 5% of Tesla's total stock, meaning the stake is likely worth $US1.7 billion to $US2.9 billion.

Tesla shares fell to $352.45, down about $4 from where they were before Musk's tweets on Tuesday sent them soaring to a near one-year high.

He said that would allow Tesla to "operate at its best, free from as much distraction and short-term thinking as possible". Tesla's stock backtracked by more than 2 percent to close at $370.34. Tesla shareholder, Ross Gerber, told IGTV he initially thought Musk's Twitter account had been hacked, before the announcement was confirmed by his investor relations representative.

In summation, Tesla stock is even more volatile than usual, Elon Musk says some wild stuff on Twitter, and the internet is freaking out about it.




Investors have serious doubts about Elon Musk's plan to take Tesla private. Musk, to date has operated with a unique level of autonomy for a public company CEO, splitting his time with other business ventures (SpaceX, Boring Company), getting personally involved in projects of personal interest (rebuilding Puerto Rico, Thai cave rescues), doing deals which make no economic sense (Solar City), tweeting on whatever topic he feels like.

"I don't really understand the idea of what was suggested in the potential for them to go private", Dick Weil, Janus Henderson's chief executive, said Thursday in an interview with Bloomberg Television.

The exact information that Mr Musk communicated to the board about his plan could not be learned. Those lingering questions, paired with a report from The Wall Street Journal on Wednesday that said the Securities and Exchange Commission was investigating the tweet, only further seemed to drag down the price. And Tesla's market value soared by $900 million in a matter of hours.

The stock was down most of the day, and dipped more after a Bloomberg report that the SEC had been gathering information on Tesla prior to Tuesday. But for Musk, that may be a small price to pay in return for greater control over Tesla's stock.


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