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Elon Musk jolts Wall Street with tweet on going private

Newsdeck

Newsdeck

Elon Musk jolts Wall Street with tweet on going private

By AFP
07 Aug 2018 0

Controversial Tesla Chief Executive Elon Musk said Tuesday he was considering taking the company private, sending shares sharply higher before trading was halted.

Musk, who has cut a controversial figure on social media and beyond, sent the financial world abuzz again around 1650 GMT, tweeting, “Am considering taking Tesla private at $420. Funding secured.”

Musk said in subsequent tweets that he would remain chief executive under a go-private transaction and that any deal would benefit shareholders.

“Am super appreciative of Tesla shareholders,” Musk said. “Will ensure their prosperity in any scenario.”

Musk, who has previously discussed possibly taking Tesla private, has had bumpy relations with Wall Street, often dismissing questions over financing.

Shares rose 7.4 percent to $367.25 before being suspending shortly after 1800 GMT.

Tuesday’s gains following the tweet added to upward movement on the stock after The Financial Times reported earlier Tuesday that a Saudi Arabian sovereign wealth fund had built a stake of between three and five percent in the company.

Tesla did not immediately respond to a request for comment.

Musk’s tweet comes as Tesla faces continued pressure to ramp up output of the Model 3 sedan, its first effort at the middle market.

The company began hitting production targets last month after missing a series of earlier benchmarks.

 

– Going against the grain –

 

Tesla shares have been on the upswing since it reported on August 1 a bigger-than-expected second-quarter but signaled that it expects to reach profitability in the third quarter and remain in the black for the foreseeable future.

Musk’s approach to a possible go-private transaction went against the grain of many companies that release major news in non-trading hours. By contrast, Musk made the initial comment on Twitter and then embellished on the remarks in a series of responses to users on the platform.

No stranger to controversy, Musk last month apologized for calling British caver Vernon Unsworth, who helped rescue 12 Thai boys from a cave a “pedo,” short for pedophile, after Unsworth spoke dismissively of the Tesla chief’s proposal for bringing the boys to safety.

He has also had a prickly relationship with Wall Street, apologizing last week to equity analysts after refusing to answer questions on a May investor call.

The billionaire Musk himself owns a bit more than 20 percent of Tesla stock. He has frequently lambasted “short” sellers of Tesla shares — those who take bets that the stock will fall in value.

Following the company’s surge after last week’s earnings, Musk took aim again at a short-seller in a reposted short YouTube video that likened these investors to Hitler’s last days.  DM

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