Automotive

Elon Musk looks to take Tesla private

Elon Musk looks to take Tesla ...
A shift to a private company would see Tesla operate similarly to SpaceX
A shift to a private company would see Tesla operate similarly to SpaceX
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A shift to a private company would see Tesla operate similarly to SpaceX
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A shift to a private company would see Tesla operate similarly to SpaceX

Elon Musk certainly isn't one to keep ideas to himself, and that extends to machinations of his electric vehicle company Tesla. The CEO has announced a wish to take the public company private, citing the expected benefits to its long-term mission.

Tesla launched its initial public offering in 2010 with shares offered at a price of US$17 apiece. It now might be about to reverse course, with Musk sharing the news on Twitter and elaborating with an email sent to Tesla employees published on the company's website. The news saw Tesla stock prices leap from $342 to $379.57 at the close of business.

"Am considering taking Tesla private at $420. Funding secured," Musk tweeted.

In the email, Musk explained his rationale for this figure, noting that it is 20 percent higher than the stock price following its Q2 earnings call. His stated desire is for shareholders, which includes the company's employees, to maintain their stake in the company. But if they opted to sell they could do so at what he sees as a "happy" price point.

Those that remained shareholders would still be able to sell off their shares at certain intervals, approximately every six months.

The overall motivation, according to Musk, is to free Tesla from the pressures of the swinging stock prices, quarterly earnings cycles and the scrutiny invited by its status as a public company. This would allow the company to pay less attention to short-term pressures and better focus on its long-term mission of bringing electric vehicles into the mainstream and swaying humanity away from a reliance on fossil fuels.

The shift would see Tesla function similarly to SpaceX, which Musk describes as far more operationally efficient. He emphasizes that there is no desire to merge the two companies and that the move is not about gaining further control himself (he currently owns about 20 percent of Tesla).

With all that being said, any potential deal would need to be ticked off via a vote from Tesla's shareholders. Musk also said that it wouldn't necessarily be permanent, flagging a move back to public markets when (or if) Tesla enters a more predictable pattern of growth.

Source: Tesla

3 comments
Daishi
Being public can be a distraction to the company but at the same time when anything happens TSLA stock moves and the media reports about it driving a lot of publicity for the company because so many people follow it. Being private would also lead to decrease in media coverage about the company.
paul314
This does bump the stock price nicely for anyone who wants to sell now. Also does make one wonder about the resulting debt load. A lot of perfectly good companies have been sunk from the debt load of going private.
Daishi
@paul314 A lot of the drama Tesla deals which is brought by all the people that are shorting the company. It's the most shorted stock with $10.7 billion worth of shares held by people shorting it. If TSLA goes private at $420 those people will lose billions in the process. Considering Elon's recent complains about people betting against the company throwing shade on earnings calls and in the media that's almost certainly part of the motivation. Some of Tesla's owners/investors already care more about changing the world than getting richer. Many of them are up 10x or more already anyway.