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Experts Cast Doubt on Musk’s Envisioned Buyout of Tesla

08 August 2018

Elon Musk shook both the Internet and financial industry Tuesday as the man in charge of Tesla [NYSE: TSLA] tweeted about taking Tesla private and buying back the stock at $420 per share.

"Musk does not want to run a public company", said Gene Munster of Loup Ventures, as Tesla's ambitious mission makes it "difficult to accommodate investors' quarterly expectations".

Tesla did not immediately respond to a request for confirmation or clarification.

Tesla stock was halted for more than an hour and a half and resumed trading up 11 percent to $380.60 as of 3:49 p.m.in NY. The company had a market value of $58 billion as of Monday's close. He indicated that taking the company private would allow Tesla to focus on long-term ambitions and remove "perverse incentives for people to try to harm what we're all trying to achieve". In a May earnings call, Tesla shares slipped after Musk derided "boring, bonehead" questions from analysts regarding the company's finances.

The stock had already been heading upwards after news about a Saudi Arabian fund with a large (about 3 to 5 percent) stake in the electric vehicle company.

Musk claimed on his personal Twitter account to have secured funding for the maneuver, estimating the per-share valuation of the possible transition at $420. But he says any deal would be structured so that shareholders could opt to remain investors or be bought out at $420 per share. The switch would mean that shareholders could no longer freely sell their shares on the open market, but Musk said that employees-and potentially other shareholders-would still receive periodic opportunities to cash out.

"In 2013, the SEC made it clear that people could use social media to disclose significant information about their companies, but they had a caveat, which is people need to know where to look", Pitt said.

Tesla CEO Elon Musk says he is considering taking the electric vehicle maker private. He also suggested the move could only be temporary as he stated "once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets".

Tesla has been the subject of a number of short sales by investors - who feel the money-losing company doesn't have a path to profitability and that its shares will tumble.

Presumably, Tesla will fund some future expansion with borrowing, as most traditional automakers do.

Third, the intention is not to merge SpaceX and Tesla. Those who stay onboard would be able to sell shares or execute stock options approximately every six months.

It contained a letter from Musk sent to Tesla employees.

Finally, this has nothing to do with accumulating control for myself. "I own about 20% of the company now, and I don't envision that being substantially different after any deal is completed".

"I wish we could be private with Tesla", he told Strauss.

Experts Cast Doubt on Musk’s Envisioned Buyout of Tesla