Elon Musk’s Tesla Claim Could Land Him in Regulatory Trouble
Elon Musk’s Tesla Claim Could Land Him in Regulatory Trouble
Elon Musk has been embroiled in a war of words on social media with critics of the electric car company
08 August, 2018, 09:26
If Musk succeed in taking Tesla private, it would be the largest leveraged buyout of all time, beating the record set by the US$45 billion deal for Texas power utility Energy Future Holdings, which ended in bankruptcy in 2014.
However, he attempted to reassure investors, saying: "Def no forced sales".
According to Musk, the decision isn't final but he believes taking Tesla private would be the "best path forward".
He added: "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, all of whom are shareholders".
"As the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company", Musk said.
Musk has frequently expressed dismay at Tesla's treatment as a public company and has clashed with regulators, critics and reporters.
Tesla CEO Elon Musk said on Twitter Tuesday he was considering having the firm purchase all outstanding shares and return the maker of electric cars to a privately held company. Tesla is already the most valuable automaker in the United States.
His missive came minutes after the Financial Times reported that Saudi Arabia's Public Investment Fund had built an undisclosed stake of 3 percent to 5 percent this year, citing people with direct knowledge of the matter it didn't identify.
As he often does, the outspoken entrepreneur took to Twitter to deliver the news. It finished up 11%, at $379.
Musk's tweet said he's secured funding.
Betting against Elon Musk has never been for the faint of heart. Doesn't really go by the book.
"The short position is the best thing the stock has going for it. "Musk vs The Shorts" is a far better narrative than 'Tesla vs Mercedes/Audi/Porsche, '" Chanos said. He said he would create a special fund to allow that.
Following the company's surge after last week's earnings, Musk took aim again at a short-seller in a reposted short YouTube video that likened these investors to Hitler's last days.
Musk owns just under 20 per cent of the company's stock. He reiterated that he would ensure the "prosperity" of Tesla shareholders "in any scenario".
Tesla is producing roughly 7,000 Model 3, Model S and Model X vehicles per week. Later in the day, trading in Tesla shares was suspended. Musk has insisted Tesla has no such need.
The SEC has brought charges in the past in at least one case in which a man was accused of manipulating stock prices with false tweets and taking advantage of the reduced prices. In May, after Tesla reported a loss of more than $700 million for the first quarter, he dismissed one question on the earnings call.
VideoElon Musk says he wants to make Tesla Inc. a private company. "This is not how you do it and it makes you wonder how seriously to take it", said Erik Gordon, a business and law professor at the University of MI.
This is especially true for a company like Tesla that has a long-term, forward-looking mission.
It would cost about $71 billion to take Tesla private at $420 per share.
In a 2013 report, the SEC said companies can use social media outlets to announce important information, so long as they comply with regulations and "investors have been alerted about which social media will be used to disseminate such information".
The stock move could give Tesla some debt relief. Tesla did not immediately respond to requests for comment.
Musk has a history of outrageous behavior on Twitter.
China's Tencent Holdings, which took a 5 percent stake in Tesla a year ago, is another possible partner. The tweet was apparently an April Fool's joke.
It's no joke that particularly in the U.S. and here in Australia, public companies are using share markets more for capital subversion, tax minimisation and corporate capture rather than truly creative, risky capitalistic endeavours.
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