Tesla boss Elon Musk shocked Wall Street and short sellers after announcing plans to take the electric car firm private.
Musk, 47, announced the news on Tuesday on Twitter where he claimed to have secured funding to buy out shareholders but didn’t provide details. In the short tweet, Musk wrote: “Am considering taking Tesla private at $420. Funding secured.”
At the end of Tuesday, Tesla’s stock had risen 11% to almost $380 per share, an amount close to their all-time high. The news angered short sellers who have been betting that the firm’s shares would fall, leading them to rake in an estimated $1.5 billion in losses.
In a statement shared on the Tesla blog, Musk told stakeholders that they would be offered $420 per share, valuing the business at just over $70 billion. He insisted that no final decision has been made, but that he wanted Tesla’s employees, all of which are shareholders, to focus on “executing” rather than the “wild swings” of the firm’s stock price.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
According to reports, Tesla has attracted the highest number of short sellers in the history of the stock market. This is because investors believe Tesla will be unable to reach the targets Musk has set out.
This, however, is something Musk wants to change, saying: “… 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, who owns 20% of Tesla, later added: “Basically, I’m trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible.”
The 47-year-old finished the statement by revealing that going private would have to be finalised through a vote of Tesla’s shareholders.