Elon Musk says move could allow electric car firm to focus on long-term goals rather than pleasing investors
James Attwood, digital editor
6 August 2018

Tesla boss Elon Musk says he is considering taking the company private, a move he claims will allow the electric car firm to focus on its “long-term mission”.

Tesla Inc is currently listed on the American Nasdaq stock exchange, but its stock price has varied dramatically in recent months, with the firm under pressure to achieve production targets for the new Model 3

Musk, who owns around 20% of the shares in Tesla, made the surprise announcement on Twitter. He said that he was considering taking the company private at $420 (£325) a share, roughly a fifth higher than the current market price.

Musk followed his tweet by releasing an email he sent to Tesla employees, saying that while no decision has been made, the possible move was about “creating the environment for Tesla to operate best”.

Tesla Model 3 review

He added: “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. Being public also 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.”

The 47-year-old added the move would protect Tesla from short sellers, who have effectively bet on the firm’s share price falling and, in Musk’s words, “have the incentive to attack the company”.

Musk's frustrations with analysts and short sellers have been evident in recent months, notably with a terse exchange on a conference call when he hit out at "boring, bonehead questions".

Our Verdict

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Lowest-price, largest-volume Tesla yet has wooed the buying public in the US. Should UK buyers join the queue for a Model 3?

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Musk said all current shareholders would have the choice to remain as investors in the private company, and that employees would remain shareholders. He added that in the future, when Tesla reached a “phase of slower, more predictable growth”, the firm could go public again.

Analysis: will the Model 3 make or break Tesla?

The proposal will have to be voted on by Tesla shareholders before it goes ahead. Following Musk’s initial tweet, trading in Tesla Inc was briefly suspended but ended at $380 (£296) a share, which was close to a record high.

Musk’s announcement came shortly the Financial Times reported that Saudi Arabia’s sovereign wealth fund had bought a $2 billion (£1.5 billion) stake in the firm.

Read more

Tesla Model 3 makes European debut at Goodwood

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Analysis: will the Model 3 make or break Tesla?

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Comments
29

8 August 2018

I hope musk achieves his aim to take Tesla private, it's been a time coming

His obvious dislike if not hatred of shortsellers and naysayers who use forums like seeking alpha and autocrat magazine and many other similar magazines have deeply frustrated his long term goals.

If this happens shortsellers like Jim chanos are going to burn in shortland realizing they pissed off the wrong CEO 

Taking it private will take him out of the scrutiny of financial analysts too who he dislikes nearly as much as the shorts and let him get on the long term vision of Tesla: to create a cleaner sustainable future

Coming out of the same news day Saudi Arabia's wealth fund has invested nearly 3 billion dollars for a stake in Tesla which boosted it's share price even more

Incredible day for that company on so many levels

8 August 2018

Musk has done an amazing job and those who own Teslas rave about them. However, he is too thin skinned for the public markets and can’t take the criticism when his plans go awry. From what I read of the analyst call, the questions were perfectly reasonable he just didn’t want to answer them. The short selling argument is spectious as the stock is at a record high. The real reason his stock has been volatile had been a concern over the ability to fund the losses from the Tesla 3 start of manufacturing . I’m not convinced that loading the company with debt to take it private would help. Probably better for the company for Musk to suck it up and stay public.

8 August 2018

Thin skinned?

Maybe, but not sure that's the whole reason.

8 August 2018

Makes sense. If you want your products to be purely functional appliances like Volkswagen then the stock market works.

If you want to make something unique, characterful and exclusive then you cannot afford to be held accountable based solely on Market Share, Annual Growth and Quarterly Earnings.

I imagine that if more British brands such as Jaguar were still in private ownership their cars would hold far greater prestige than they currently do.

Morgan is the perfect example of a car company done right. No other automaker do I hold in such high regard as Morgan for remaining true to their identity and not selling out for corporate $$.

Hopefully Musk can do the same with Tesla without shrinking it back to a 5,000 unit/year company.

8 August 2018

Agree absolutely on your comments

Also your comments about Morgan too

Do you remember was it Harvey Jones who went in to sort out Morgan predicting they would wither and die if they didn't follow his advise and change their ways?

Look at that result, Morgan lives on big time because of its singular vision

Accountants and analysts  don't get it about Morgan and not about Tesla either

8 August 2018
lambo1 wrote:

Agree absolutely on your comments

Also your comments about Morgan too

Do you remember was it Harvey Jones who went in to sort out Morgan predicting they would wither and die if they didn't follow his advise and change their ways?

Look at that result, Morgan lives on big time because of its singular vision

Accountants and analysts  don't get it about Morgan and not about Tesla either

But Morgan DID change its ways in the end - it kept building the olde worlde stuff, but also introduced new high tech stuff too and then mixed them up as well.

XXXX just went POP.

8 August 2018

Morgan is a hobby company, whereas Tesla is a mass manufacturer, There is no serious comparison to be made and it certainly isn’t private vs public. Musk very happy to take hundreds of millions of $ from investors when things going his way, not happy to answe their legitimate questions when not. Like others have pointed out hinting ref a bid on Twitter May not play well with the SEC.

8 August 2018

Shareholders are at risk of shares going up or down- thats the way of the markets and sentiment, and for Musk being happy to take millions from investors- why do you think they invested? for carrots?- behave yourself.

Morgan, a hobby company- you are missing the point- its all about vision, Morgan has vision and so does Tesla- get it?

8 August 2018

He better have this all lined up and evidenced, or he's off to prison for market abuse.  This was about him trying to beat the shorters.

8 August 2018

Why would you want to buy shares at $420 when the price is currently $380 ?

Oh, right !

(You are a naughty, naughty, Mr Musk. I think someone's going to be hearing the word 'insider' a lot in the next few years).

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