Tesla board evaluating CEO's bid to take company private

Adjust Comment Print

His tweets didn't really explain why he wanted to do that, but a new email explains why.

Tesla's stock has swung wildly in the past several years, hit by the company's production issues as well as Musk's own explosive remarks on Twitter that have turned off investors.

Making money has proven elusive for Tesla while it has been investing in electric auto technology and ramping up production of its vehicles, including a sedan with a starting price of $35,000 to appeal to a broader audience.


It seems to have gotten the better of the billionaire who has tweeted that he's considering taking the company private. However, it certainly looks like his messages on social media have had direct consequences on Elon Musk's personal fortune, and on his company's stock price: Tesla shares started Tuesday trading at about $340 and went as high as $387. He said funding was "secured", without elaborating. But they did not reveal who or what institution Musk may have been referring to when he posted "funding secured". "He has done enough things that might warrant somebody taking a close look", Pitt said.

Musk has been under intense pressure this year to turn his money-losing, debt-laden company into a profitable higher-volume manufacturer, a prospect that has sent Tesla's valuation higher than that of General Motors Co. Tesla is a legendary cash-burner, with roughly $10 billion in debts and $2 billion in reserves, and Musk would probably need in the tens of billions of dollars to buy out shareholders at the right price. The transaction would amount to the largest leveraged buyout - in which a company borrows money to repurchase shares and exit the public market - of all time. The statement did not address how the $420-per-share price was established.

If the content of Musk's tweet was not true, lawyers argue, it could expose Tesla's mercurial chief executive officer and the company to regulatory action and private lawsuits.


Mr Musk said in his tweet on Tuesday that shareholders would be offered $420 (£326) per share, valuing the business at more than $70bn.

A Tesla spokesperson declined to comment.

Investors have also questioned why the maneuver was not listed in a 69-page SEC filing, submitted last week and released Monday, that provided intricate detail of Tesla's financial outlook and coming events.


He suggested he did in an initial tweet, but so far Tesla hasn't disclosed any sources of financing, and no one has stepped forward publicly to say they're backing the plan. "Your disclosures should create certainty in the market so that everyone has a fair and complete understanding of what is going on", Goody said.

Comments