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Tesla CEO Drops Latest Bombshell With $72B Buyout Proposal

Musk has long raged against short sellers and mentioned his desire to be rid of them as one of his reasons for taking Tesla private

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Musk may buy GM plant to boost Tesla production. (VOA)
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Tesla CEO Elon Musk is considering leading a buyout of the electric car maker in a stunning move that would end the maverick company’s eight-year history trading on the stock market.

In his typically unorthodox fashion, the eccentric Musk dropped his bombshell on his Twitter account, which he has used as a platform for pranks, vitriol and now for a proposal to pull off one of the biggest buyouts in U.S. history.

Musk got the ball rolling Tuesday after the stock market had already been open more than three hours with a tweet announcing he might buy all of Tesla’s stock at $420 per share with no further details.

At that price, the buyout would cost nearly $72 billion, based on Tesla’s outstanding stock as of July 27, but it’s unlikely the deal would cost that much because Musk owns a roughly 20 percent stake in the Palo Alto, California, company. He also said he intends to give Tesla’s existing shareholders the option of retaining a stake in the company through a special fund, if they want.

“Am considering taking Tesla private at $420. Funding secured,” Musk wrote in his first tweet, following up with “good morning” and a smiley emoji.

His tweet came hours after the Financial Times reported that Saudi Arabia’s sovereign wealth fund had built a significant stake in Tesla Inc., but it was unclear if that was the funding Musk was referring to. The Financial Times, citing unnamed people with direct knowledge of the matter said Saudi Arabia’s Public Investment Fund had built a stake of between 3 and 5 percent of Telsa’s shares.

Musk’s announcement was initially met with widespread skepticism, with many people connecting the proposed $420-per-share offer with 420 being a common slang term for marijuana.

Musk also previously used his Twitter account to joke that Tesla was going bankrupt in an April Fool’s Day tweet and his stability was called into question last month after he called a British diver who helped rescue children from a Thailand cave a pedophile. That baseless tweet was quickly deleted and Musk apologized to the diver.

Elon Musk
Musk got the ball rolling Tuesday after the stock market had already been open more than three hours with a tweet announcing he might buy all of Tesla’s stock at $420 per share with no further details. (Wikimedia Commons)

The confusion caused by Musk’s Tuesday announcement via Twitter also prompted regulators of the Nasdaq stock market to temporarily suspend trading in Tesla’s stock.

Musk later brought some clarity to the situation in an email to Tesla employees that was also posted on Tesla’s blog. Trading in Tesla’s stock resumed shortly after, and the stock climbed 11 percent to $379.57. Musk’s offer is 9 percent higher than Tesla’s peak closing price of $385 reached nearly a year ago.

By taking Tesla private, Musk believes that the company will be able to sharpen its long-term focus of revolutionizing an automobile industry dominated by fuel-combustion vehicles without having to cater to investors’ fixation on how the business is faring from one quarter to the next.

Making money has proven elusive for Tesla while it has been investing in electric car technology and ramping up production of its vehicle, including a sedan with a starting price of $35,000 to appeal to a broader audience.

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 percent. Tesla lost another $717.5 million in its most recent quarter.

Also Read: Why Elon Musk has Suddenly Gone Ballistic on Twitter

Despite its challenges, Tesla has remained a favorite among many investors, partly because of their faith in Musk, who made his initial fortune as a co-founder of PayPal and also is the CEO of a trail-blazing aerospace company, SpaceX, that’s already private.

But another substantial segment of investors are convinced Tesla is doomed to fail and are betting on the company’s eventual demise by becoming “short sellers” of its stock. Short sellers borrow shares from other investors and then immediately sell them on the premise that they will be able to buy them back at a lower price later to replace they stock they borrowed.

Musk has long raged against short sellers and mentioned his desire to be rid of them as one of his reasons for taking Tesla private. “Being public means that there are large numbers of people who have the incentive to attack the company,” he wrote. (VOA)

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Elon Musk Hints at Boring Company’s First Tunnel launch

"Electric skates will carry between 8 and 16 passengers, or a single passenger vehicle," according to the Electrek

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Musk hints at Boring Company's first tunnel launch in US. (VOA)

Billionaire Elon Musk on Saturday tweeted a photograph with “The Boring Company” and “December 18” on it, indicating that his infrastructure and tunnel construction firm is set to launch its first tunnel under Los Angeles in the US.

Boring Company was earlier slated to launch the tunnel on December 10 and postponed it.

The company reportedly said they would offer the first public test ride with the electric transport system inside the tunnel.

Earlier in October, Musk had announced that the Boring Company was “almost done” with its maiden test tunnel and they would open the project to the public around December 10.

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Tesla CEO, Elon Musk. (Wikimedia Commons)

According to Elon Musk, the company is building a watchtower at the exit of the tunnel with bricks made from dirt dug out of the tunnel.

In Chicago, the company will reportedly build a “Loop” which they described on their website as: “Loop is a high-speed underground public transportation system in which passengers are transported on autonomous electric skates travelling at 125-150 miles per hour.”

Also Read- Rocket Lab is Set To Launch 10 NASA CubeSats

“Electric skates will carry between 8 and 16 passengers, or a single passenger vehicle,” according to the Electrek.

In order to implement this system, the company will have to dig the tunnels and deploy the infrastructure to move those “autonomous electric skates” inside the tunnels. (IANS)