Tesla directors have said they knew about Elon Musk's surprise proposal to privatise the money-losing vehicle maker before he tweeted about it and have met several times in the past week to discuss the proposal. Musk's money-losing and cash-burning company is an unlikely candidate for debt investors to be willing to help go private. Of course, going private probably won't require anywhere near that much money, based on how Musk wants it all to go down.
Tesla has moved to further formalise the prospect of the electric auto company undergoing a buyout with a statement from the company's directors.
Tesla stock opened at $369.09 on Wednesday, sliding almost 3 percent from its Tuesday closing price of $379.57.
Tesla Inc Chief Executive Officer Elon Musk'splan to take the electric auto maker private raised doubts among Wall Street analysts about the billionaire' s ability to gather enough financial backing to complete the deal.
'Am considering taking Tesla private at $420, ' Musk tweeted, referring to the value of the share price he would have to pay. As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders.
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Musk has promised a sustained net profit starting in the third quarter.
The issue of share accumulation by outsiders emerged only recently as reports that Saudi Arabia's public investment fund had built up a stake from 3 to 5 percent after its offers of purchase of new shares in Tesla were spurned by the company. "How could Tesla possibly fund such a large transaction?"
Taking Tesla private would also free Musk from his tumultuous relationship with Wall Street as a whole, which had been consuming a significant portion of his time as well as a significant amount of all news surrounding the automaker.
The whole thing isn't yet set in stone because it must be put to a shareholder vote. "If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us".
Midway through the trading session in NY on Wednesday, Tesla shares were down 5% at $374 after surging 11% on Tuesday. Many initially thought it was Elon Musk's attempt at a bad joke about marijuana, because "420" has always been associated with pot.
It seems to have gotten the better of the billionaire who has tweeted that he's considering taking the company private. But they did not reveal who or what institution Musk may have been referring to when he posted "funding secured".