SpaceX and Tesla CEO Elon Musk announced Tuesday afternoon that he is considering taking Tesla private at $420 per share.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Immediately after his tweet, stock prices surged for Tesla, reaching almost $370 per share before trading for the company was halted
shortly after 2 p.m.
Musk released a statement about an hour and a half after the trading halt
that said he had not yet made a final decision on the matter, but feels that taking the energy company private would provide the environment necessary for Tesla to operate at its best.
“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,” Musk said.
Trading resumed before the close of market, and Tesla ended the day at almost $380 per share.
To buy out the company from shareholders at $420 per share, Musk would have to spend roughly $85 billion, according to Axios.
Musk says his intention in considering privatizing the company does not have to do with him wanting to gain more control of Tesla.
Instead, he said wants to take Tesla private because he believe the company works best when there are not “large numbers of people who have the incentive to attack the company.” Musk claims these attacks are present because Tesla is the most shorted stock in the history of the stock market.
“I fundamentally believe that we are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we’re all trying to achieve,” Musk continued in his announcement on Tesla’s blog.
Even though he wants to take Tesla out of the stock market, Musk hopes that shareholders will remain invested in the company and for all Tesla employees to remain shareholders.
Former Securities and Exchange Commission chairman Harvey Pitt said Tuesday that he believes Musk may have committed securities fraud with his tweet if he made the announcement with the intention of manipulating the stock price of Tesla.
“If his comments issued for the purpose of moving the price of the stock, that could be manipulation, it could also be securities fraud,” Pitt told CNBC.
