Elon Musk tweets a lot. This time was different

Elon Musk tweets a lot. This time was different

On Tuesday, Tesla CEO Elon Musk said he's considering a reversal - taking the electric auto company private. 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.

The disclosure initially raised questions whether the eccentric Musk was joking, but he then amplified on his plan in a subsequent tweet that said he meant to create a special fund that would allow all current Tesla shareholders to retain a stake in the vehicle maker if they want.

At US$420 per share, a deal would be worth US$72 billion (S$98 billion) overall.

Elon Musk has said taking Tesla private would provide the company with an "enormous opportunity". Later in the day, trading in Tesla shares was suspended.

Asked on Twitter whether Musk would continue to be CEO under such a scenario, he replied there would be "no change".

Musk has been under intense pressure this year to prove he can deliver on his promise to turn his money-losing company into a profitable higher-volume manufacturer, a goal that has propped up Tesla shares and resulted in a market value higher than that of General Motors.

Musk has been in a very public battle with these shorts for years. But the company has given no details of how such a buyout would work, or if funding is indeed in place. As he explained "Being public ... 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 also said he does not now have a controlling vote in the company and wouldn't expect a single shareholder to have one if the company were private. Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts have suggested that less transparency would be welcomed by Musk.

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"Tesla's volatility makes it more of a trading stock than a value play", said Ihor Dusaniwsky, head of research at S3 in NY.

"This is great news for any bondholder any way you spin it", said Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment Management who owns both the convertibles and the stock. He said in his letter to employees he did not seek to expand his ownership. Either they can stay investors in a private Tesla or they can be bought out at $420 per share, which is a 20% premium over the stock price following our Q2 earnings call (which had already increased by 16%). Here are a few things he gains by taking Tesla private.

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.

Such a deal, if it went ahead, would take Tesla out of the glare of Wall Street but might limit its access to capital.

Tesla shares were halted from trading at $367.25 Dollars per share shortly after 2:00 pm for more than an hour after Musk's tweets.

Musk argued that his other major company, SpaceX, offered a good model for Tesla to emulate. Harvey Pitt, the former chairman of the U.S. Securities and Exchange Commission told CNBC that discussing the exact price on Twitter was "highly unprecedented... and raises significant questions about what his intent was". A spokesperson for the SEC declined to comment when reached by Gizmodo.

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

The CEO wrote in a letter to employees Tuesday, revealing that he is genuinely considering moving Tesla off the public stock markets.

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