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| Tesla trading halted after Elon Musk's 'take-private' tweet sends stock soaring | |
| (35 minutes later) | |
| Shares in Tesla surged before trading was abruptly halted after Elon Musk responded to reports that Saudi Arabia has built up a stake in the electric carmaker by saying he could take the company private. | |
| Tesla’s stock rose by more than 6% by the middle of Wall Street’s trading session on Tuesday after Musk tweeted that he was “considering taking Tesla private” and had funding in place to do so at a price of $420 (£325) per share. | |
| The tweet appeared to be triggered by a report in the Financial Times that Saudi Arabia, one of the world’s largest oil-producing nations, has built up a stake in Tesla worth up to $2.9bn. | |
| Am considering taking Tesla private at $420. Funding secured. | Am considering taking Tesla private at $420. Funding secured. |
| A price of $420 per share would value Tesla at more than $70bn, well above its stock-market value, which reached $60bn on Tuesday after the stock climbed. | |
| Saudi Arabia’s public investment fund, which invests its vast oil wealth, has quietly built up a stake of between 3% and 5% in the company, according to the FT. The investment would not have emerged until now because stakes of less than 5% do not need to be disclosed to the stock market. | |
| PIF, which manages more than $250bn in assets, reportedly made an overture to Musk earlier this year, offering to invest money in the company in return for new shares. | |
| Tesla ignored the approach, prompting PIF to begin acquiring shares in the company through the stock markets, with the assistance of JP Morgan. | |
| In a tweet issued shortly after the reports emerged, Musk wrote: “Am considering taking Tesla private at $420. Funding secured.” | |
| He tweeted: “I don’t have a controlling vote now and wouldn’t expect any shareholder to have one if we go private. I won’t be selling in either scenario.” | |
| The rise in Tesla’s share price took its value to $20bn more than the value of Ford. | |
| Notwithstanding the difficulty of raising more than $50bn to buy out other shareholders in the money-losing automaker, Musk’s reasoning to bring Tesla back into private ownership is at least understandable. | |
| “Elon Musk does not want to run public companies,” Gene Munster, a managing partner at venture capital firm Loup Ventures, told Bloomberg. “His missions are big and make it difficult to accommodate investors’ quarterly expectations. Our guess is there is a one-in-three chance he can actually pull this off.” | |
| But a little more than an hour after Musk teased his privatization plan on Twitter, trading in Tesla shares was abruptly halted. | |
| No Wall Street bank contacted by the cable channel CNBC said it was aware of any transaction or had any knowledge of commitment to funding a leveraged buyout of Tesla. | |
| The Securities and Exchange Commission (SEC) also declined to comment on the matter. | |
| The confusion increased speculation that Musk was engaged in a stunt – which could backfire if Musk is found to have violated fiduciary directives governing how senior executives at publicly-held companies are permitted to release information that could affect a firm’s stock price. | |
| In 2013, the SEC ruled that companies are allowed to use social media outlets like Facebook and Twitter to announce news. But Musk seemed to be making a pun by twice tweeting “420” – an abbreviation of 4/20, a code-term for the consumption of cannabis. | |
| Musk’s fondness for making statements via Twitter has backfired in the past. He attracted furious criticism after baselessly calling a British diver who helped rescue the boys trapped in a flooded cave in Thailand a “pedo”. Tesla’s share price dropped and Musk was forced to apologise. | |
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