Elon Musk Says Tesla May Go Private, and Its Stock Soars

“Am considering taking Tesla private at $420,” said a post on Elon Musk’s Twitter account, referring to the company’s share price. “Funding secured.”

Elon Musk has become one of the world’s most prominent chief executives, and a billionaire several times over, by boldly making big bets on ideas that few others thought possible.

He started a private rocket company that sends materials into space, and plans to send astronauts soon. He is creating machines to bore giant tunnels through the earth. And Tesla Inc., where he serves as chief executive, has succeeded in creating an Apple-like brand of electric cars.

Through it all, he has shown a maverick — some would say arrogant — management style. On Tuesday, he may have outdone himself.

In a terse and cryptic Twitter post, he declared that he was ready to take Tesla private. The stock market that made his company worth over $60 billion wasn’t worth the hassle.

“Am considering taking Tesla private at $420,” he wrote. “Funding secured.”

Tesla’s stock was already up sharply on a report that Saudi Arabia was taking a sizable stake in the company. But investors were left to puzzle out the implications of Mr. Musk’s proposition, its relationship to the Saudi report, and even the authenticity of the tweet. And so, starting at 12:48 p.m., the market that Mr. Musk threatened to forsake went into a frenzy.

At 2:08 p.m., with shares up more than 7 percent for the day, trading was halted pending news — news that finally came shortly before 3:30.

“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,” Mr. Musk said in a statement to Tesla employees that was released by the company. He cited the demands of the quarterly earnings cycle and the damage wrought by investors who are betting against the company.

“I fundamentally believe that we are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we’re all trying to achieve,” the statement said.

Mr. Musk said that no final decision had yet been made about taking the company private, and that any such proposal would have to be approved by shareholders.

He outlined a plan under which shareholders could be bought out for $420 a share — a 20 percent premium over the stock price after the company’s second-quarter earnings call last week — or they could remain as private shareholders.

“This has nothing to do with accumulating control for myself,” he wrote. “I own about 20 percent of the company now and don’t envision that being substantially different after any deal is complete.”

Tesla trading resumed 15 minutes before the end of the trading session, and the shares added to their gains, closing at $379.57, up 11 percent.

Mr. Musk did not elaborate on any sources of financing to take Tesla private. The announcement followed a report that the Public Investment Fund of Saudi Arabia had acquired a stake in the company.

A person briefed on the matter, who was not authorized to speak publicly about the deal, said the Saudi fund had taken a stake of less than 5 percent.

The Financial Times reported that the shares had been acquired for the fund in the secondary market with the help of JPMorgan Chase. The bank declined to comment.

If the transaction got done at $420 per share, Tesla would be valued at just over $70 billion, making it the biggest deal in which a company is taken private.

Although Tesla has become the most valuable American car company, it has yet to turn an annual profit since its founding in 2003. And its chief executive, a 47-year-old native of South Africa, has come under increasing pressure as he has scrambled to increase production of the Model 3, a midsize sedan that he is counting on to drive up revenue and enable the company to become profitable.

Still, this is not the way multibillion-dollar leveraged buyouts are typically announced. Companies would normally line up banks, private equity firms or other deep-pocketed investors to agree in advance to provide money to finance the purchase of shares.

Officials representing a number of large banks and investment funds said on Tuesday that they had not talked with Tesla about financing a buyout, although it is possible the company had secured funding from other sources.

Mr. Musk’s comments on Tuesday — mentioning the specific price of a possible buyout and declaring that Tesla had already arranged funding — were virtually guaranteed to send the shares flying. Still, while it was unusual for a chief executive to make a market-moving announcement on Twitter, there is nothing improper about it on its face.

In 2013, the Securities and Exchange Commission said it was permissible for companies, and people acting on their behalf, to make announcements using social media platforms like Twitter and Facebook. It said companies had to alert investors in advance that those would be channels for important corporate news. And Tesla did so, in a filing in 2013.

But the S.E.C. has also advised that intentional releases of market-moving information on social media platforms or websites must be accompanied by a simultaneous release to the broader public. The delay between Mr. Musk’s tweet and Tesla’s corporate announcement could be of interest to the S.E.C., said Michael Liftik, a former deputy chief of staff at the commission who is now a partner at the law firm Quinn Emanuel Urquhart & Sullivan.

“Simultaneously really means simultaneously,” he said. And he said a tweet would be held to the same standard of factuality as a news release.

Others pointed out that Mr. Musk’s tweet could have opened his company up to legal exposure from investors with financial incentives to sue.

“What they have to show is there was a material misstatement, in these loose statements, by Mr. Musk,” said John C. Coffee Jr., a professor at the Columbia Law School’s Center on Corporate Governance. Mr. Coffee said the statement “funding secured” could be a legal gray area where plaintiffs’ attorneys see an opportunity to make a case.

“That’s a very broad statement about what is still an extraordinarily amorphous transaction,” Mr. Coffee said.

The S.E.C. had no comment, and Tesla would not comment beyond what was in Mr. Musk’s statement to employees.

In Twitter exchanges on Tuesday, Mr. Musk said becoming a private company would “save a lot of headaches” and noted that it was a move taken by Dell Technologies. The computer company, founded by Michael S. Dell, became a private enterprise in 2013, though it recently moved to sell shares to the public again.

Being a public company and reporting earnings every three months “puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long term,” he said. Having its stock traded publicly also means that Tesla can attract short-sellers — investors who are betting against Tesla — whom he described as “people who have the incentive to attack the company.”

Tesla has attracted more so-called short-sellers than any other publicly traded company, in part because many investors doubt the company can achieve the lofty targets that Mr. Musk has set.

Tesla’s short-sellers on Tuesday racked up about $1.5 billion in losses, according to S3 Analytics, a technology and research firm. That brings their losses so far this year to $3 billion.

Going private “would definitely benefit Elon Musk and the way he’d like to run the company,” said Efraim Levy, an analyst at CFRA Research. “It’s clear he doesn’t like the intrusion he gets as a public company.”

In an earnings call in May, Mr. Musk lashed out at analysts who sought more detail on Tesla’s financials and outlook, railing at their “boring, bonehead questions.”

He has also objected to analysts’ conclusions that the company may have to raise additional capital from investors later this year as it continues to post losses and use up hundreds of millions of dollars in cash each quarter.

After struggling for months to streamline two assembly lines inside its factory in Fremont, Calif., Tesla built a third line underneath a gigantic tent outside the plant’s walls in a bid to meet its Model 3 goals. With that line in operation, Tesla was able to produce 5,000 Model 3 sedans in seven days in late June, the rate at which Mr. Musk has said Tesla can be profitable.

Last week, as Tesla reported a $743 million loss for the second quarter, on revenue of $4 billion, Mr. Musk said his goal was to produce quarterly profits going forward.

Mr. Levy, the analyst, said that even if Tesla went private, it would probably still need to borrow to pursue its plans for new models and new factories. “The question is whether they will have the same investor support,” he said. “As a private company with a lot of debt, the risk goes up.”

He characterized Mr. Musk’s management style as “unique.”

“There are a lot of unexpected surprises,” he said.

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