Published: Wed, August 08, 2018
Markets | By Noel Gibbs

Tesla buyout would need to go short on leverage

Tesla buyout would need to go short on leverage

Musk, in confirming his desire to take the company private, said he's hoping to create a special investment fund that would allow shareholders to remain invested in Tesla.

The stock since settled at $US366.94 before exchanges halted trading, pending an upcoming announcement from the company. It burned through less cash ー $739.5 million in Q2 compared to $1 billion the quarter before ー and managed to increase production significantly of the mid-range Model 3 sedan.

Musk owns just under 20 per cent of the company's stock. Musk also said he had no intention of selling his stake, and he said he would remain on as CEO.

When another person tweeted that going private "saves a lot of headaches", Mr Musk replied, "Yes".

Tesla boss Elon Musk has suggested via Twitter that he is "considering" taking the electric auto firm private.

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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.

For example, one block of 714 Tesla call options, betting on the shares rising above US$365 by the end of the week, were bought for 85 cents, for a total outlay of US$60,690 on Tuesday.

Now the question is, is this a similar move, taking the pressure off the public performance that Musk disdains each quarter, combined with some hubris over decimating the multitude of short positions.

Musk also faced intense public criticism after he suggested in a tweet that one of the rescuers of the Thai soccer team trapped in a cave was a pedophile.

Green Car Reports reached out to Tesla for comment and is awaiting comment. 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.

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Tesla's stock bounced 7.3 percent Tuesday before trading was halted on Wall Street, according to Bloomberg.

The unusual step taken early Tuesday afternoon came shortly after Musk dropped a bombshell on his Twitter account by announcing he had lined up the financing to buy all of Tesla's stock at $420 per share.

"He originally brought Tesla public in 2010, given he could no longer personally finance its growth, and has continually expressed his frustration with the company being public". "Funding secured", Musk tweeted at 12:47 p.m. - with Tesla shares trading hands at about $356.67. It would require a shareholder vote, Musk said. Public companies often have thousands of shareholders-ranging from huge pension plans and mutual funds to ordinary retail investors.

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

In his letter to employees, Musk also pointed to pressure from short sellers as a major downside to being a public company. Before Musk's tweet, Tesla had a market value of $58 billion, already higher than that of General Motors or Ford, even though those companies are significantly larger and more profitable.

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But the market appeared to take him seriously with Tesla shares surging on the news.

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