Tesla CEO Elon Musk is thinking about taking the company private, he said in a Tweet this morning. More specifically, he said he may buy back the company for $82 billion (at a share price of $420 plus debt), and already has the funding to do so.
Following the original tweet, Musk said he doesn’t have a controlling vote now and “wouldn’t expect any shareholder to have one if we go private.”
Musk’s hope, he later tweeted, is that “all current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment.”
Musk, who said he would stay on as CEO, also seems willing to have a provision for retail investors, who have held Tesla shares prior to Dec. 31, 2016, to convert their shares into private shares. Musk, in response to a tweet, said he’s “super appreciative of Tesla shareholders” and “will ensure their prosperity in any scenario.”
Musk’s original tweet came shortly after news broke that a Saudi Arabian sovereign wealth fund bought a $2 billion stake in Tesla. Tesla’s stock rallied following Musk’s tweets, jumping as high as $371.
Update 11:17am PT: Trading for Tesla shares have been halted.
Whether this is appropriate disclosure under SEC rules is unclear, but it’s worth noting that it does allow companies to make certain announcements in specific circumstances on social media. The caveat is that investors must know to watch those channels for those announcements.
Back in 2012, Netflix CEO Reed Hastings announced Netflix subscribers passed one billion hours of content watched. The following year, the SEC announced that was ok to do and that Hastings did not violate Regulation Fair Disclosure, which requires companies to distribute information regarding their financial success in ways that are widely accessible.
Musk has a following of 22.3 million people on Twitter, while Hastings had just over 200,000 followers on Facebook at the time of his announcement. That’s just to say I could see how one could argue Musk has a large enough reach to not be in violation of Regulation FD. But, I’m also not the SEC, which was not available for comment at the time of publication.
Tesla’s stock has been rather volatile in the last year, trading as low as $244.59 in April and as high as $389.61 in September.
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