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TESLA CEO ELON Musk has said the company will continue to be publicly traded, weeks after suggesting that he would take the pioneering electric carmaker private.
Musk met Tesla’s board of directors on Thursday “and let them know that I believe the better path is for Tesla to remain public. The Board indicated that they agree”, he wrote on the company blog.
Musk surprised markets on 7 August by announcing on Twitter he wanted to take Tesla private at $420 (€360) a share. But the shares have fallen by more than 20% since.
After the announcement the controversial entrepreneur came under extensive scrutiny over his Twitter statements related to the proposal, especially a claim that Tesla had “secured” funding for the move.
Tesla shares tumbled on reports that the US Securities and Exchange Commission has subpoenaed Musk to talk about the tweet.
Normally such a major announcement — taking a huge company private — would be explained in detail beforehand to regulators.
Musk said yesterday that based on his talks with shareholders, as well as an assessment by financial advisers Silver Lake, Goldman Sachs and Morgan Stanley, “it’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company”.
Even though the majority of shareholders “said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don’t do this’,” he wrote.
“I knew the process of going private would be challenging, but it’s clear that it would be even more time-consuming and distracting than initially anticipated.”
Musk wrote that the company “must stay focused on ramping (up the) Model 3 and becoming profitable. We will not achieve our mission of advancing sustainable energy unless we are also financially sustainable.”
The Model 3 is a $35,000 (€30,000) mid-sized electric sedan that the company — which still has not made a profit — is banking will be its runaway hit.
“Difficult and painful” year
Musk acknowledged that he was exhausted from overwork following the market-rattling 7 August tweet.
“This past year has been the most difficult and painful year of my career,” Musk told the New York Times in an interview on 16 August.
The newspaper said the swashbuckling CEO choked up at times as he talked about working endless hours trying to meet production deadlines, spending his 47th birthday in June — every hour of it — at work and almost missing his brother’s wedding.
The physical toll his job is taking meant life has “not been great, actually. I’ve had friends come by who are really concerned”, he told the newspaper.
Musk described the infamous privatisation tweet — which included an assurance that funding for going private was secured — as an attempt to be transparent.
The news shocked investors, market analysts and even Tesla board members.
Musk explained on the company blog that his much scrutinised statements about financing were based on his conversations with Saudi Arabia’s sovereign wealth fund and other investors.
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Saudi Arabia wealth fund. What would they do with an electric car company?
@prop joe: What would they do with any company? Make money off it.
@prop joe: Well they have the problem that their country is overly reliant on the price / demand for oil so taking the majority stake in a electric vehicle company would help them diversify their income / interests for future.
@Shane Corry: a corrupt regime like the Saudi’s, i would not trust them with a majority stake. The Electric Car has been held up by corrupt officials in the Western countries taking money and jobs from tge oil lobby.
@prop joe: They might end up getting it anyway and trying for a hostile takeover – preventing this seems to be one of the reasons going private came up in the first place. In the space of 5 months they’ve purchased a 6.3% shareholding from the markets.
@prop joe: they know the end is near and will cease been useful to the world, the second that happens isreal and America will give them a long overdue bombing back to the stone age, where their attitudes belong,
Musk did this to fry the short sellers.
In one of the interviews the journalist asked him if regrets this going private thing, as it did land a SEC investigation and a few lawsuits. His reply was “I regret nothing”.
Bravo sir, troll level 910 reached.
He’s lost his marbles. More than happy to raise cash through selling shares and diluting the faithful while not accepting the fact that people can bet both ways. You can’t pick and choose what rules you want to apply.
@Lambo Moonski: The problem they have is they have huge payments of debt due in March & April next year (like $3B) and if the stock price is under like $355 they have to be paid in cash rather than stock.
Tesla doesn’t and highly likely won’t have the cash to pay that and they can’t easily raise more money because they promised shareholders they were done with raising more cash from selling shares / debt. Tesla has an insane amount of debt for a company that is unprofitable and low on cash reserves.
He could raise cash better by selling model 3 cars . Can’t wait for them to come to Ireland
@Conor O’Neill: ‘wait’ being the operative word.
@Shane Corry: They have a Market Cap of 55bn dollars , the share price was trading at 186 dollars at the end of 2016 ( its over 300 dollars now ) , they have a business model where unlike all the legacy car makers customers pay deposits before the cars have to be built and put into showroom etc etc – they are being played on the markets by short sellers who don’t gove a fkkk about the business but are playing the stock – as an entrepreneur taking on energy and transport sectors he is going to get an incredible amount of flak and push back but he has achieved incredible feats already to bring space X and Tesla to where they are at now – if you want to just throw around some fear and skeptism about the company maybe you should give some of the upsides too for balance.
queue the class action lawsuit
4 20 bro!!!
How high was he when he made that tweet!!?
Yes for electric cars and everything about them. I love the silence and the idea. But the tesla (any model) is horrible. I’m back in the market again in January and looking for something. Went to look at the tesla. Great piece of kit but it needs to not look like a car that was drawn for a 90′s car racing game. Put it beside cars of equal value and it looks as good as a mini metro. BMW 640 Msport please and thanks.
Elon Musk: living proof that even the fugliest of nerd can score a string of the world’s most beautiful women once he’s worth 20 billion
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