Published: Wed, August 08, 2018
Finance | By Gustavo Carr

Elon Musk Tweets About Taking Tesla Private; Jolts Wall Street

Elon Musk Tweets About Taking Tesla Private; Jolts Wall Street

"Funding secured", Musk said on Twitter, without disclosing the source of the funding. Per CNBC, no major Wall Street banks have committed to finance a deal to take Tesla private, though a Financial Times report even earlier Tuesday suggests Saudi Arabia might have the gumption ― and the means ― to make it happen. The buyout is good for a 20 percent premium over the current market price of the stock and would value the company at over $70 billion dollars at current numbers of outstanding shares.

That price would represent a 22.8 per cent premium to Tesla's closing price on Monday. Bloomberg reports that if Musk managed to scrape together the cash to go private, it would be the largest leveraged buyout in history.

Initially there were suggestions that the vagueness of Musk's tweets meant he might not have been serious, or even that he had been hacked.

The US Securities and Exchange Commission allows companies to use social media outlets like Facebook and Twitter to announce key information in compliance with its fair disclosure rules so long as investors have been alerted about which social media outlets will be used to disseminate such information.

Tesla did not immediately respond to a request for comment.

Tesla on August 1 reported that it had ended the second quarter with $2.78 billion in cash after spending $610 million in capital expenses, while its negative free cash flow narrowed.

Elon Musk just added $900 million to his fortune. There is no reference to Musk's Twitter account on the company's investor relations page under "investor communication", although Tesla's Twitter feed is included.

It's no joke that particularly in the United States and here in Australia, public companies are using share markets more for capital subversion, tax minimisation and corporate capture rather than truly creative, risky capitalistic endeavours.

Shares have rallied strongly since those earnings, but Musk has continued to show a short fuse towards critics, lambasting "short" sellers of Tesla shares - those who take bets that the stock will fall in value.

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It appears that Musk is hopeful that shareholders will simply hang in for the ride and willingly go private. "Already do this with Fidelity's SpaceX investment".

"Am super appreciative of Tesla shareholders", Musk said.

On April Fool's Day, amid growing market concerns about Tesla's cash crunch, he had tweeted a fake news release that said Tesla would have to file for bankruptcy. "Plus, this is short squeeze rocket fuel after a nice quarter".

Tesla chief executive Elon Musk is gearing up to lead a buyout of the electric auto maker in a stunning move that would end the maverick company's eight-year history trading on the stock market.

Short interest in Tesla on Monday stood at almost US$12 billion, equivalent to 28 per cent of its float, according to S3 Partners, a financial analytics firm. "I can't believe this is something to bluff or make fun of", George Galliers of Evercore ISI said. They'll have an option to sell at $420 per share or to hold onto their shares and become shareholders of the new private company.

"Details, structure, participants and how the valuation has been determined remain to be seen".

The stock had climbed slightly earlier in the day after the Financial Times reported that Saudi Arabia has quietly built a big stake in the company.

The SEC has brought charges in the past in at least one case in which a man was accused of manipulating stock prices with false tweets and taking advantage of the reduced prices.

Tesla share owners...for now.

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