Update: Tesla’s shares have resumed trading, and Musk released a letter outlining his rationale for taking Tesla private.
Tesla CEO Elon Musk tweeted today (Aug. 7) that he is “considering” taking the electric car company private, and claims he has secured the funding to do so. The news brought turmoil that halted trading of Tesla stock just after 2:00 PM.
Based on the tweet, Musk appears to have priced the company at $420 per share, a 22% premium over today’s share price. The stock rose 6% today, along with news that Saudi Arabia’s sovereign wealth fund reportedly bought a stake worth as much as $3 billion, or just below 5% of the company, on secondary markets. As for funding, Musk nor Tesla have given any indication about who could provide such a massive infusion of capital, roughly $70 billion based on current shares. One prime candidate, of course, is Saudi Arabia, although Musk turned down their previous offer to buy publicly issued shares, according to The Financial Times (paywall).
Musk seems ready to try to rid himself of public criticism and attacks that have come since going public. The vitriol has only intensified as Tesla has struggled to deliver timely on its promises, and burned through billions of dollars per year as it scales up. But Musk has also gone after short sellers, investors betting against Tesla, calling them “jerks who want us to die,” and taunting them on social media.
With Musk, it’s often difficult to parse intent and he’s been known to troll on social media. However, this would be an extreme case that could land him in regulatory trouble. The former SEC chair Harvey Pitt told CNBC that Musk’s disclosure of a share price for giving private is “highly unprecedented… and raises significant questions about what his intent was.”
Although unconventional, it is likely not illegal for Musk to turn to Twitter to make such an announcement, assuming it’s true. The US Securities and Exchange Commission made a 2013 statement that companies can use social media outlets like Facebook and Twitter to disclose key information that complies with fair disclosure law (Regulation FD) so long as investors know which social media platform is being used.
Neither Tesla nor the SEC responded to press inquiries at the time of writing. This story will be updated with new developments.