Tesla shares halted at $367 per share Tuesday afternoon, after a string of tweets from CEO Elon Musk hinted at taking the company private.
Tesla shares jumped shortly after Musk’s first tweet: “Am considering taking Tesla private at $420. Funding secured.”
In a statement on Tesla’s website, Musk said “a final decision has not yet been made,” but it would create “the environment for Tesla to operate best.”
“As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders,” Musk stated.
Musk proposed a new structure for Tesla shareholders -- either stay on as private investors or they can be bought out at $420 per share, a 20 percent premium over stock valuations predicted in the second quarter of the year.
Musk also said his intention is not to merge Tesla and SpaceX, but would like to see Tesla under a similar business structure as SpaceX, where external shareholders and employee shareholders have an opportunity to buy or sell about every six months.
“Finally, this has nothing to do with accumulating control for myself,” Musk said. “I own about 20 percent of the company now, and I don’t envision that being substantially different after any deal is completed.”
Musk’s tweets came after the Financial Times reported that Saudi Arabia’s sovereign wealth fund had acquired up to a 5 percent stake in the company, with a worth of up to $3 billion.
The Securities and Exchange Commission has not commented on the matter, CNBC reported.
Current investors could stay with Tesla through a special fund or sell their shares for $420, Musk tweeted.
At the price mentioned in Musk’s tweet, Tesla would be valued at nearly $72 billion, which is 18 percent higher than its current market capitalization, Fortune reported.
That would make the electric carmaker more valuable than BMW, at $64 billion, Starbucks, at $70 billion and CVS, at $66 billion, CNBC stated.
Telsa has not publicly commented on the matter.
Musk tweeted that he didn’t intend to sell the company.
Musk’s tweets also encouraged current shareholders to stay with Tesla if the company does go private.
If Tesla were to go private, it could remove some pressure from the company and the carmaker would not have to publicly disclose quarterly earnings.
As to whether or not Musk could announce company news on Twitter, the SEC determined in 2013 that companies can use social media outlets to announce important information, so long as they comply with regulations and “investors have been alerted about which social media will be used to disseminate such information,” CNN reported.
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