Elon Musk’s mad, mad world
Musk stuns Street, wants to take co. private
Buckle up, it’s going to be a wild ride.
Elon Musk shocked Tesla investors — and the Twittersphere — on Tuesday by announcing on the micro-blogging site that he wants to take his company private.
Musk even had a price — $420 a share.
The tweet, so out of the blue that media outlets first thought Musk’s Twitter account may have been hacked, assured shareholders that the money to take the electric car maker private was in the bag.
“Am considering taking Tesla private at $420. Funding secured,” Musk tweeted at 12:47 p.m. — with Tesla shares trading hands at about $356.67.
In two minutes, the shares had gained 4 percent, to $371.
Without an official statement to back up the tweet, Nasdaq halted trading in Tesla shares shortly thereafter. Meanwhile, Twitter was on fire with speculation — debating the seriousness or legitimacy of Musk’s announcement.
A few hours later, the world had its official confirmation.
“Earlier today, I announced that I’m considering taking Tesla private at a price of $420/ share,” Musk said in a blog post on Tesla’s site. “I wanted to let you know my rationale for this, and why I think this is the best path forward.”
Musk said he wants to take the $64 billion company private because of the “large numbers of people who have the incentive to attack the company.”
Tesla has been the subject of a number of short sales by in- vestors who feel the moneylosing company doesn’t have a path to profitability and that its shares will tumble.
Musk has been in a very public battle with these shorts for years. In his blog post, he said the shorts had “perverse incentives” for trying to harm the company.
Even before the take-private tweet, Tuesday was shaping up as an interesting day for Tesla.
Earlier, it was learned that Tesla had secured a $2 billion investment from Saudi Arabia’s sovereign wealth fund. The news, first reported by the Financial Times, sent Tesla shares up about 5 percent.
They were still trading in that range when Musk created his storm. As Twitter exploded, Tesla representatives, usually quick to answer reporters’ calls, remained silent.
In the absence of information, former Securities and Exchange Commission Chairman Harvey Pitt, in an interview on CNBC, said Musk had to be careful with his comments so as to not run afoul of securities laws.
The tweet “might constitute fraud if any of the facts he disclosed are not true,” Pitt said.
Musk, in confirming his desire to take the company private, said he’s hoping to create a special investment fund that would allow shareholders to remain invested in Tesla.
While the Twitterati asked whether the $420 price was real — the number is a slang term for marijuana — he confirmed that it was about a 20 percent premium over Tesla’s share price when it announced second-quarter results.
Musk did not elaborate how he had secured the funding that he had mentioned in his tweet — or which lender was leading the effort.
Shares started trading again at 3:45 p.m. They closed at $379.57 — up 11 percent, but far from the $420 price Musk was dangling.