Elon Musk creates stir: Tesla could and should go private, CEO says

Nathan Bomey | USA TODAY

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Tesla CEO Elon Musk said Tuesday that he wants the company to go private in a startling development that immediately stirred an intense reaction on social media and caused the stock to spike.

"Am considering taking Tesla private at $420. Funding secured," Musk tweeted at 12:48 p.m. Tuesday.

He later said the "only reason why this is not certain is that it’s contingent on a shareholder vote."

Musk, whose tweets initially caused confusion as some investors questioned whether he had been hacked, later confirmed his thinking through Tesla's official website.

"I think this is the best path forward," he said in an email to employees, further clarifying that "a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best."

Tesla shares spiked 11 percent to close at $379.57 after trading was halted for part of the afternoon while investors awaited clarification. The stock's record high was $389.61 on Sept. 18, 2017.

Musk has repeatedly expressed frustration in the past over public trading of the company's stock, including investors who bet that the stock will decline, a process known as shorting.

As a private company, Tesla would not be subjected to all of the disclosure requirements or trading volatility that affect publicly traded companies.

"This would be an incredible and surprising development," said CFRA Research stock analyst Efraim Levy, who tracks Tesla.

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The unexpected initial tweet immediately gave investors reason to weigh whether the statement was authentic or whether, in fact, Musk's account was hacked.

Tesla representatives did not immediately respond to requests for comment, leading industry watchers to speculate over the nature of Musk's tweets.

But then he confirmed his thinking in an email to Tesla employees that the company published as a blog post.

"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, all of whom are shareholders. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term," he wrote.

"Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company."

Am considering taking Tesla private at $420. Funding secured. — Elon Musk (@elonmusk) August 7, 2018

On Twitter, he noted that he does not control the company and wouldn't sell his shares if the company goes private.

I don’t have a controlling vote now & wouldn’t expect any shareholder to have one if we go private. I won’t be selling in either scenario. — Elon Musk (@elonmusk) August 7, 2018

Musk's stake in Tesla is worth about $12 billion, according to S&P Global Market Intelligence. He owns about 20 percent of the company, which is valued at about $62 billion as of Tuesday afternoon.

Investors would have a choice on whether to sell out or maintain their shares.

"My hope is for all shareholders to remain, but if they prefer to be bought out, then this would enable that to happen at a nice premium," he wrote.

The original tweet came shortly after a Financial Times report that the investment arm of Saudi Arabia has acquired a substantial stake in the electric-vehicle maker.

Tesla, contacted before the Musk tweet, declined to comment on the Saudi Arabia post.

The Financial Times reported that Saudi Arabia's stake is between 3 and 5 percent.

The oil-rich nation has been actively trying to diversify its economy, in part by using its sovereign wealth fund to invest in alternative assets. The fund has more than $250 billion in assets.

Musk's other big company is Space Exploration Technologies, known as SpaceX. Musk said he would not use the proposed go-private transaction to merge the two companies.

Majority shareholder approval would be required for the plan to happen.

"If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us," Musk said. "Either way, the future is very bright and we’ll keep fighting to achieve our mission."

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.