Elon Musk considers taking Tesla private as stock jumps

Elon Musk

CEO Elon Musk said on Twitter he is considering taking Tesla Inc. private at $420 United States per share as the electric vehicle maker faces the challenges of fast growth and financial constraints, sending its shares up more than six per cent. In the past year alone, Tesla shares have seen a wild swing, trading as low as $244.59 last April to reaching its all-time high less than six months later amid upbeat Model 3 sentiment.

The company's stock price jumped from US$342.54 ($460.76) prior to the announcement to US$379.57 ($510.60) at the day's close, a rise of nearly 11 per cent, but still significantly short of the proposed buy back price.

By taking Tesla private, Musk believes that the company will be able to sharpen its long-term focus of revolutionizing an automobile industry dominated by fuel-combustion vehicles without having to cater to investors' fixation on how the business is faring from one quarter to the next.

That price would represent a 22.8 percent premium to Tesla's closing price on Monday.

Tesla spokespeople have not yet confirmed the proposal to any media outlets.

When another person tweeted that going private "saves a lot of headaches", Musk replied, "Yes". According to the Times, the Saudis recently approached Musk and offered to buy even more Tesla shares, an offer that Musk refused.

The firm's shares climbed more than 6% after the tweet, but the Nasdaq later halted trading pending an announcement. They were later halted for news pending.

Tesla's current valuation is approximately $61 billion via its market capitalization. He also noted that going private would avoid stock shorting attempts to harm the company.

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In contrast, private companies have a smaller number of shareholders-generally fewer than 2,000-and are not available for purchase on public markets.

Former SEC chairman Harvey Pitt spoke up about the matter to CNBC, noting that Musk's tweet "might constitute fraud if any of the facts he disclosed are not true" or if there's any indication that his tweet was sent for the goal of boosting Tesla's stock price by soliciting investor hope.

Musk has a long history of bristling at the amount of scrutiny Tesla endures from investors and media. "Already do this with Fidelity's SpaceX investment".

However, some analysts were skeptical that Mr. Musk could engineer a buyout.

But asked if he would take legal action against Musk over the allegation, Unsworth said: 'If it's what I think it is yes'. "Plus this is short squeeze rocket fuel after a nice quarter", said analyst Chaim Siegel from Elazar Advisors.

"I can't believe this is something to bluff or make fun of".

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".

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