Tesla CEO Tweets About Taking Tesla Private, Elon Musk's Cryptic Message to Short Sellers?

Tesla CEO Tweets About Taking Tesla Private, Elon Musk's Cryptic Message to Short Sellers?

Author: Eric Walz   

Tesla CEO Elon Musk surprised the business world today with a tweet suggesting he might take his electric car company private at $420 a share. He wrote that funding for the move is already secured.

The $420 target price would increase Tesla's valuation to $70 billion, making it the most valuable U.S. automaker.

The tweet from Musk is a bit cryptic, but the Tesla CEO is continually feuding and trolling Wall Street short sellers— investors who borrows shares and immediately sells them, hoping they can buy them back later at a lower price.

Most recently, the Tesla CEO berated Greenlight Capital's David Einhorn's bet against his company after the hedge fund manager said the firm's bet against Tesla "was our second biggest loser" in the most recent quarter.

Musk has also pushed back against Wall Street analysts, including those at Goldman Sachs, which continues advise clients to sell Tesla stock. The CEO called out Goldman back in April after the bank issued a gloomy forecast.

"Place your bets," Musk tweeted, appearing to challenge short sellers to exit at their own risk.

The surprising tweet from Musk boosted Tesla share price today nearly 5 percent, to nearly $370. Tesla stock is up nearly 20 percent from just a week ago, when the Tesla CEO in a Q2 earning call eased fears about meeting Model 3 production goals. The company has been struggling to ramp up production to over 5,000 units per week, and it finally looks like that might happen in the next quarter, easing investor fears.

Will Becoming Private Help Tesla?

Private companies are not required to publicly disclose financial information, while public companies are required by the Securities and Exchange Commission to file an annual report documenting their performance in detail.

Since private companies are not required to disclose financial information, they can focus on long-term growth and innovation rather than making sure shareholders are receiving their quarterly dividends. Tesla's long term goal is transition the world to sustainable energy with electric cars and solar powered homes. Tesla is one of the tech world's closely watched stocks.

In addition, private companies do not require shareholder approval for operational and growth strategy decisions made by the company, as long as that is stated in their corporate documents.

However, public companies need serious financial backing to go private, including Tesla. Coincidentally, Musk said that he has the funding needed to go private in his tweet today.

Saudi Arabia's sovereign wealth fund has acquired a significant position in Tesla shares, according to the Financial Times. The news outlet reported the Saudi Public Investment Fund bought a 3 percent to 5 percent stake in Tesla worth about $1.9 to $3 billion, according to people with direct knowledge of the deal.

Tesla first went public in June of 2010 on the Nasdaq exchange. The company offered 13.3 million shares at $17 each. Since then, Tesla company launched its first electric car, the Model S, in June 2012. Tesla followed it the Model X SUV, and last summer began building its first mass-market car—the Model 3.

Tesla has not confirmed any plans to take Tesla private or clarified Elon Musk's tweet.

Eric Walz
Eric Walz
Originally from New Jersey, Eric is an automotive and technology reporter specializing in the high-tech industry in Silicon Valley. Eric has over fifteen years of automotive experience and a B.A. in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the automotive industry and beyond. He has worked on self-driving cars and as a technical writer, helping people to understand and work with technology. Outside of work, Eric likes to travel to new places, play guitar, and explore the outdoors.
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