Shares in Tesla climbed 6.8 per cent to US$365.36 at 1.47pm Tuesday in NY (4.47am Wednesday, NZT), putting his fortune above US$25 billion after the company's co-founder tweeted that he's considering taking the electric-carmaker private at US$420 a share.
A leveraged buyout of Tesla, which went public in 2010 on Nasdaq and which sports a market capitalization of almost $64 billion, or other take-private transaction would represent an abrupt change in financial strategy. In follow-up tweets, Musk said shareholders could either sell at $420 or hold their shares and go private, adding that he was super appreciative of Tesla shareholders and would ensure their prosperity in any scenario. Musk previously tweeted an April Fool's joke about his $60 billion company going broke.
Tesla shares, which were already rising on news of the Gulf investor, spiked in response. At $420 a share, Tesla would have a market cap of around $71 billion.
Tesla shares are up more than 5 percent at $360.64.
Elon Musk is the world's 31st-richest person and Tesla's largest shareholder.
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The SEC declined comment on Musk's tweet. The stock had been worth about $342 a share before Musk's tweet. Chief Executive Elon Musk jolted financial markets on Tuesday with a surprise statement suggesting he is considering taking the electric-car maker private. Tesla has always been one of the most-shorted stocks on Wall Street, but so far, the company has not seen the share-price meltdown that shorts expected. Shares are up as high as 9% on the day.
The company said last week that it had burned more than $700 million in cash during the second quarter but made roughly $4 billion in revenue amid increased production of its new Model 3 sedan. He would still allow employees to keep their shares unless they want to jettison theirs at Musk's $420 price, which he noted was 20 percent higher than the stock was as of the Q2 earnings call.
This is especially true for a company like Tesla that has a long-term, forward-looking mission. I think he's serious. In the future, once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets. He added: "I can't believe this is something to bluff or make fun of".
"His mission for Tesla (to accelerate the globe's adoption of sustainable energy) is both grand and long-term, making it hard to accommodate investors quarterly expectations", he wrote.