Elon Musk isn't kidding, Tesla board confirms TSLA could go private

08 August, 2018, 23:44 | Author: Gerard Cortez
  • Reuters  Rebecca Cook

Ford Executive Vice President Jim Farley on the benefits of being a public company after Tesla CEO Elon Musk tweeted he is considering taking his company private.

"T$3 he reason for doing this is all about creating the environment for Tesla to operate best", the email reads.

Tesla Inc Chief Executive Officer Elon Musk'splan to take the electric vehicle maker private raised doubts among Wall Street analysts about the billionaire' s ability to gather enough financial backing to complete the deal.

The oil-rich kingdom of Saudi Arabia's investment fund has gobbled up a multibillion-dollar stake in the company in recent months, the Financial Times reported Tuesday, but Tesla has not answered questions about the involvement of the kingdom, or anyone else, in how he would finance the company's exit from public markets.

Musk's tweets caused a flurry of activity in financial markets.

The company, which is losing money and burning through cash reserves, has not revealed how it plans to raise more than $70bn it needs to offer shareholders the $420 per share that Musk indicated.

Musk mused Tesla could be bought back at $420 per share. Musk owns about 20 percent of the Palo Alto, California, company's stock, so that likely would reduce the cost of the buyout.

FILE PHOTO: Elon Musk, founder, CEO and lead designer at SpaceX and co-founder of Tesla, speaks at the International Space Station Research and Development Conference in Washington, U.S., July 19, 2017.

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Bernstein analyst Toni Sacconaghi said Musk's statements puts Tesla under pressure to detail how it intends to proceed with the deal to go private.

Musk has promised a sustained net profit starting in the third quarter.

Company share prices, particularly in deals as giant as this one, are nearly always decided by corporate executives, board members or consultants who review market data and optimize for maximum value.

China's Tencent Holdings Ltd, which took a 5-percent stake in Tesla previous year, could also be a possible partner. "If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us".

Most analysts were skeptical, but some said a deal could materialize if Musk succeeded in lining up the right funding. "And if you stay as a shareholder you get less information than before and you depend more and more on Elon Musk".

SoftBank is now not interested in a deal for Tesla after earlier this year taking a stake in General Motors Co's (GM.N) self-driving unit, Cruise, Reuters reported earlier on Wednesday.

Days after Tesla opened up the Model 3 configurator to all potential buyers, not just reservation holders who got a place in line over a year ago, uncomfortable math lingers over the automaker's.

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