Tesla Trading Halted After Musk Mentions Taking Company Private - at $420 a Share

Matt Posky
by Matt Posky

Tesla may be going private, according to a Tuesday message from Elon Musk’s Twitter account. “Am considering taking Tesla private at $420. Funding secured,” the CEO wrote. “Good morning,” he said immediately afterward, accompanying the message with the smiley face emoji.

What followed was rampant media speculation as to whether Musk was in his right mind or not, while Musk continued responding to questions online.

“I don’t have a controlling vote now & wouldn’t expect any shareholder to have one if we go private. I won’t be selling in either scenario,” he said after being asked whether it would be an outright sale and if he could retain control of the company. “My hope is *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.”

Meanwhile, CNBC and a few other news outlets noted that the number 420 has a special significance in the marijuana-smoking community and that Musk’s good-morning tweet was issued at around 1:30 p.m. Eastern, which — gasp — isn’t in the morning at all!

Of course, Musk lives on the West Coast — where it would still technically be the morning and cannabis laws are pretty lax. If Elon woke up late, smoked a “jazz cigarette,” and set shares at a price point he found hysterical, that’s his business. Still, a THC-induced stock announcements is not the most prudent decision for a CEO to make — assuming that’s even what happened.

At the suggested price of $420 per share, Tesla would be worth roughly $71.7 billion — about 18 percent higher than its current market value. However, the gap began to close after Musk’s announcement and shares shot up nearly 6 percent before being halted at $367 per share at 2:00 Eastern.

Which begs the question, did Elon break the law by not issuing some kind of warning to existing shareholders? Musk makes statements via Twitter all the time and has millions of followers, so it could be argued that any tweet issued is tantamount to an official announcement. But that’s not the way things are traditionally done. Likewise, if there is no financing in place, it could be argued that the CEO made a false claim that artificially boosted share prices. That could net him some legal ramifications. The U.S. Securities and Exchange Commission is likely to weigh eventually, so we’ll keep you updated.

Musks’ latest tweets claims going private will eliminate the “negative propaganda” associated with short sellers. He also confirmed investor support, adding that the only uncertainty is that everything remains contingent on a shareholder vote.

[Image: Tesla Motors]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • RRocket RRocket on Aug 07, 2018

    Oh the irony....Tesla is about to be bought by what is essentially Big Oil.

    • See 2 previous
    • JohnTaurus JohnTaurus on Aug 07, 2018

      Or maybe because the U.S. has finally taken the chains off its own oil, which has significantly reduced their stranglehold on the market? Nahh. Must be that they see no oil use in the near future, because, ya know, petroleum products aren't used in the production of EVs. They're made from pixy dust and unicorn farts.

  • 28-Cars-Later 28-Cars-Later on Aug 07, 2018

    You can't make this sh!t up. I said it last year and I'll say it again, the fix is in on TSLA as he's got deep, deep pockets behind this.

  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
  • ToolGuy Ford is good at drifting all right... 😉
  • Dave Holzman A design award for the Prius?!!! Yes, the Prius is a great looking car, but the visibility is terrible from what I've read, notably Consumer Reports. Bad visibility is a dangerous, and very annoying design flaw.
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