Musk had randomly announced he was thinking about taking Tesla private but has now changed his mind again.
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The 7th of August 2018, Musk tweeted he was considering taking Tesla private at 420$ per share, adding “Funding secured”. After the announcement, shares were trading at 379$ each, before trading was suspended due to possible irregularities with Musk’s tweet. Taking Tesla private at 420$ would have meant needing around 70 billion dollars in funding. Problems quickly appeared, with nobody knowing who had offered to fund the operation. It turned out Musk was in talks with the PIF (Saudi Arabia’s Public Investment Fund), and understood they were ready to fund the operation.
2 weeks later, the 25th of August, Musk decided to backtrack and announce Tesla would be staying public. This comes after talking with banks, investors and Tesla’s board. According to Musk, the main reasons he decided to keep Tesla public are the following:
- Many investors would be unable to invest in a private company, mainly due to regulatory reasons, meaning they would not be able to continue supporting the company.
- Going private would be too “distracting” and much more complicated than originally expected.
He also insisted the funding was there. It is ironic he uses the word “distracting” as a reason to stay public, while using the same excuse to justify going private, constantly complaining how taking care of the stock and short shellers makes him waste a lot of time.
Soon after tweeting about taking Tesla private, some investors decided to sue the company, arguing Musk’s aim was manipulating the stock price to make short sellers lose money.
Even if Musk considers this matter closed, the US Securities and Exchange Commission (SEC) is still investigating whether his Tweet was true or not. Some people also consider that this event might have affected investors, with them becoming less patient, especially taking in account the constant drama that Musk and Tesla are surrounded with.
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