Published: Wed, August 08, 2018
Markets | By Terence Owen

Trading in Tesla stock suspended after Musk tweet on going private

Trading in Tesla stock suspended after Musk tweet on going private

Additionally, the Tesla bull weighed in on the likelihood of Musk taking the company private. "Funding secured", Musk said in a tweet shortly before 1 p.m. Musk discussed the plans further in a blog post later Tuesday.

Mr Musk's statement came at a time when the electric vehicle maker faces financial constraints, and barely a week after the company announced it had made its biggest net loss to date of $717.5m (£547.6m) during the second quarter ending in June. Its current market value is $61 billion. Musk's offer is 9 per cent higher than Tesla's peak closing price of $385 reached almost a year ago.

A deal at $420 per share represents a 22.8pc premium to Tesla's closing price on Monday, valuing the company at about $72bn. It followed the news that Saudi Arabia's sovereign wealth fund had built a less than 5 percent stake in Tesla worth about $2 billion.

"We're working on a new Tesla mini-car that can squeeze in an adult", Musk tweeted on Sunday, replying to a user who asked him about a "Model X Radio Flyer" toy auto. CNBC also contacted a number of Wall Street banks and none of them was aware of any transaction or had committed to funding a leveraged buyout of Tesla.

Musk's tweet comes as Tesla faces continued pressure to ramp up output of the Model 3 sedan, its first effort at the middle market. Fortune has yet to ascertain the veracity of the tweet, and will update this article once Tesla responds.

Tesla's shares were at $362.74 prior to the share halt being lifted. If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us.

The whole thing isn't yet set in stone because it must be put to a shareholder vote.

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The sudden announcement gained immediate criticism from former regulators who suggested it may conflict with Securities and Exchange Commission rules for potentially market-moving statements.

Tesla reported an adjusted loss per share of $3.06 for the second quarter, which was larger than what analysts had predicted, and revenue of $4 billion, which beat analyst projections.

The company has only posted a quarterly profit twice in its history and has never made money during an entire calendar year, something that Musk has been trying to change by cutting costs, including recent mass layoffs that trimmed Tesla's workforce by 9 per cent. Tesla lost another $717.5 million in its most recent quarter.

BUYING TIME. Elon Musk has had a bumpy relationship with investors as of late, and has taken Twitter to lash out at short sellers repeatedly. Prices seesawed in the range of $360 to $370, a roughly 7 to 8 percent rise for the day, while investors tried to decide whether Musk was joking.

"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 wrote.

Taking Tesla private would certainly qualify.

This is especially true for a company like Tesla that has a long-term, forward-looking mission.

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