Tesla Inc chief executive officer Elon Musk on Tuesday said on Twitter that he is considering taking the company private in what would be the largest deal of its type, moving the electric-car maker out of the glare of Wall Street as it goes through a period of rapid growth under tight financial constraints.
“Am considering taking Tesla private at $420. Funding secured,” Musk wrote.
At US$420 per share, a deal would be worth US$72 billion overall.
Musk did not disclose the source of the funding.
Tesla did not immediately respond to a request for confirmation or clarification. Its shares jumped more than 7 percent to US$367.25 before being halted for news pending.
When another person tweeted that going private “saves a lot of headaches,” Musk replied, “Yes.”
Asked whether he would continue to be chief executive officer under such a scenario, Musk replied there would be “no change.”
Musk has been under intense pressure this year to prove he can deliver on his promise to turn the money-losing company into a profitable higher-volume manufacturer, a goal that has propped up Tesla shares and resulted in a market value higher than that of General Motors Co.
Going private is one way to avoid the intense scrutiny of public markets.
Musk has had feuds with regulators, critics and reporters, and questions remain about Tesla’s production and manufacturing difficulties, long-term demand for its cars and uncertainty over funding.
“Musk does not want to run a public company,” said Gene Munster of Loup Ventures LLC, as Tesla’s ambitious mission makes it “difficult to accommodate investors’ quarterly expectations.”
Musk owns nearly 20 percent of the company. A price of US$420 per share price would represent a 22.8 percent premium to Tesla’s closing price on Monday, which gave the company a market value of about US$58 billion.
“Our guess is there is a one-in-three chance he can actually pull this off and bring Tesla private,” Munster said. “The 16 percent premium to the current share price may not be high enough to incentivize existing shareholders to support the sale.”
Musk tweeted that he hoped all current investors would remain were the company to go private.
“Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment,” Musk tweeted, referring to the private space launch company he also runs.
The US Securities and Exchange Commission allows companies to use social media outlets, such as Facebook and Twitter, to announce key information in compliance with its fair disclosure rules so long as investors have been alerted about which social media outlets will be used to disseminate such information.
The commission did not immediately respond to a request for comment on Musk’s tweet.
Despite the unconventional method of disclosing such information, analysts took Musk at his word.
“I believe Tesla considers Tweets as public disclosure. I think he’s serious. Plus this is short squeeze rocket fuel after a nice quarter,” Elazar Advisors LLC analyst Chaim Siegel said.
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 only higher.
Short interest in Tesla on Tuesday stood at nearly US$13 billion, according to financial analytics firm S3 Partners LLC.
“I can’t believe this is something to bluff or make fun of,” said George Galliers of Evercore ISI. “Given his historic frustration with short sellers, analysts and certain parts of the press, it is perhaps also not surprising that he has given consideration to taking the company private.”
Earlier on Tuesday, a source familiar with the matter said that Saudi Arabia’s sovereign wealth fund, Public Investment Fund, had bought a minority stake of just below 5 percent in Tesla.
The Financial Times earlier reported the investment.
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