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Elon Musk Tweets And Blogs About Taking Tesla Private At $420, Claims To Have Secured Funding

Taking Tesla private at $420, the price Elon Musk touted would amount to a $72 billion valuation, a mammoth sum that left many investors stunned.

Seemingly out of the blue, on Tuesday a wild tweet hit wall street, Elon Musk proclaimed that he might pull his money-losing Tesla off the market. Taking Tesla private at $420, the price he touted would amount to a $72 billion valuation, a mammoth sum that left many investors stunned.

Later Elon Musk shared an internal memo, he wrote to the Tesla employees, on the Tesla blog. In the memo, Musk explains the rationale behind his tweet, Musk thinks going private is the best environment for Tesla to operate and the pressures from investors on the swinging stock prices is distracting for everyone working at the Electric Car company. He also said, “A final decision has not yet been made.”

Mr. Musk owns about 20% of Tesla, with insiders owning another 5% roughly and individual investors holding about 12%. The remaining 62.2% is held by institutions. Musk took Tesla public in 2010, while SpaceX and The Boring Company remained private. Musk’s tweet came shortly after the Financial Times reported that the state investment fund of Saudi Arabia had become one of Tesla’s biggest shareholders after recently accumulating a roughly $2 billion stake. The tweet and the memo have left a lot of questions unanswered – Where will the funds for the buyout come from?

Tesla said last week that it had burned through more than $700 million in cash during the second quarter but made roughly $4 billion in revenue amid the increased production of its new Model 3 sedan. Musk said the automaker, which has never made an annual profit, would be profitable by the second half of the year. Tesla has about $10 billion in outstanding debts and about $2 billion in cash reserves, but Musk has asserted in recent months that the company would have no need to raise new funds.

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