Musk tweets he may take Tesla private and shares roar
NEW YORK (AP) —
Tesla CEO Elon Musk announced Tuesday that he is considering taking the electric car maker private, causing the company's stock to spike.
In keeping with his unorthodox style, Musk made the out-of-the blue announcement in a terse tweet. He said he may take the company private at $420 a share and already has secured funding.
"Am considering taking Tesla private at $420. Funding secured," Musk tweeted, following up with "good morning" and a smiley emoji.
His tweet came hours after the Financial Times reported that Saudi Arabia's sovereign wealth fund had built a significant stake in Tesla Inc., but it was unclear if that was the funding Musk was referring to. The Financial Times, citing unnamed people with direct knowledge of the matter said Saudi Arabia's Public Investment Fund had built a stake of between 3 and 5 percent of Telsa's shares.
Tesla did not immediate respond to requests for comment.
The company's shares were up more than 5 percent at more than $360.
It's highly unusual for the head of a major company make a significant announcement in such casual manner. The tweet prompted questions about how serious Musk's intentions were. His asking price of $420 would be 22 percent of Monday's closing share price, and nearly 9 percent above the stock's all-time closing high of $385. The figure even drew some jokes on Twitter about whether it was a pot reference, with 420 being a common slang term for marijuana.
Musk's tweet came two weeks after Tesla revealed it had burned through $739.5 million in cash on its way to a record $717.5 million net loss in the second quarter, as it cranked out more electric cars.
Tesla has spent millions as it reached a goal of producing 5,000 Model 3 sedans per week by the end of June. The company says production is rising, with the goal of 6,000 per week by the end of August.
Musk pledged earlier this month to post net profits in future quarters, and he said he expects to company to avoid returning to the markets for capital and to be self-funding going forward.
Musk's abrasive style has often been a source of friction with Wall Street. Earlier this year, he caused a stir during a first quarter earnings call when he angrily cut off two analysts whose questions annoyed him. The CEO apologized to those analysts during the second quarter call.
Musk's other company, aerospace firm SpaceX, is privately owned.