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Tesla board evaluating CEO's bid to take company private

08 August, 2018, 23:46 | Author: Lawrence Cooper
  • Danny Moloshok  Reuters

"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".

The US Securities and Exchange Commission has made inquiries into Tesla in the wake of Musk's tweets, The Wall Street Journal reports.

Musk later clarified in a blog post that "a final decision has not yet been made", while touting the benefits of running a private company away from the "enormous pressure" of Wall Street's quarterly earnings cycle. "This included discussion as to how being private could better serve Tesla's long-term interests, and also addressed the funding for this to occur", the statement said.

Tesla CEO Elon Musk met with SoftBank CEO Masayoshi Son about taking the electric-car maker private previous year, Bloomberg reports.

The board members said they were "taking the appropriate next steps" to evaluate the proposal.

Earlier today, Elon Musk did what he does best and set the internet ablaze - this time, based on a tweet about potentially taking Tesla private again.

Going private is one way to avoid close scrutiny by the public market as Musk and the company face those challenges.

Tesla's shares were down less than one per cent at $376.31 USA in morning trading on Wednesday after closing up 11 per cent at $379.57 U.S. on Tuesday.

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Musk took Tesla shareholders and the stock market by surprise on Tuesday by announcing on Twitter he was considering taking the loss-making electric car-maker private at $420 USA a share.

Musk owns an nearly 20 per cent stake in Tesla, meaning he'd still need roughly $70 billion in financing to take Tesla private.

Elon Musk's tweets early on Tuesday caused plenty of speculation and controversy. Musk owns about 20 percent of the Palo Alto, California, company's stock, so that likely would reduce the cost of the buyout.

Musk is already CEO of another private company: SpaceX. In his first tweet he said funding was secured but provided no details.

"They're being bombarded with questions that we don't think are as relevant to the long-term value of the company", said Sam Korus, an analyst for ARK Investment Management, which had 443,874 Tesla shares as of June 30.

The six board members who issued the statement on Wednesday included James Murdoch, chief executive of Twenty-First Century Fox Inc. and Brad Buss, who was the chief financial officer of solar panel maker SolarCity until it was bought by Tesla in 2016. Many initially thought it was Elon Musk's attempt at a bad joke about marijuana, because "420" has always been associated with pot.

China's Tencent Holdings Ltd, which took a 5-percent stake in Tesla a year ago, could also be a possible partner. The move is estimated to require north of $50 billion to buy out the public shareholders.

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