However, he attempted to reassure investors, saying: "Def no forced sales".
"The reason for doing this is all about creating the environment for Tesla to operate best", Musk, 47, wrote in an email to employees. 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.
"It's unfathomable to me that anyone would finance the acquisition of such a liability-laden company that is losing so much money and have massive capex requirements going forward", said Mark Spiegel, portfolio manager of hedge fund Stanphyl Capital Partners, who holds a short position in Tesla and has been a vocal critic of Musk on Twitter.
The company's CEO, Elon Musk, made waves earlier in the day, tweeting he is considering taking the company private once its share price reaches US$420. Tesla is already the most valuable automaker in the United States.
"Those two things taken together really sent the market up, really just made investors go insane", said Bloomberg News Editor Tom Giles.
Tesla shares were halted from trading at $367.25 Dollars per share shortly after 2:00 pm for more than an hour after Musk's tweets. It finished up 11%, at $379. "Funding secured", he said on Twitter.
Did Elon Musk violate any securities regulations, particularly Reg FD [Fair Disclosure], which according to the Securities and Exchange Commission, prohibits selective disclosure of material information? Doesn't really go by the book. This is not to say that it will make sense for Tesla to be private over the long-term. "Would create special objective fund enabling anyone to stay with Tesla". Though notably, that halt was not put in place until after Musk disclosed on Twitter that he was considering turning the company private. He said he was "super appreciative" of Tesla shareholders, and vowed to "ensure their prosperity in any scenario".
Tesla is producing roughly 7,000 Model 3, Model S and Model X vehicles per week. Musk's tweetstorm was over, but Tesla's future was uncertain. This would enable you to still share in the growing value of the company that you have all worked so hard to build over time.
Earlier this year, he proposed building a website to rate reporters' credibility and launched a Tesla Roadster into space aboard a SpaceX rocket. "This is not how you do it and it makes you wonder how seriously to take it", said Erik Gordon, a business and law professor at the University of MI.
One investor, the CEO of Gerber Kawasaki Wealth & Investment Management, Ross Gerber, said he had "no intention" of selling his shares at $420.
A price of US$420 per share price would represent a almost 23 per cent premium to Tesla's closing price on Monday, which gave the company a market value of about US$58 billion.
Officially, the SEC is fine with financial announcements on social media as long as investors are alerted to which platform they should be keeping an eye on and that no investors are given an advantage to receive the information first.
Greentech Media senior analyst Allison Mond gave her view on Tesla going private, with a careful eye to its solar business.
Tesla said in a regulatory filing in 2013 that investors interested in keeping up with Tesla should follow Musk's account. His $12 billion Tesla stake would presumably be rolled into the private enterprise.
He also said he does not now have a controlling vote in the company and wouldn't expect a single shareholder to have one if the company were private. Musk, however, has been promising investors he won't have to dilute current shareholders by issuing more stock, and given how Tesla's bonds have performed since they were issued, debt might not be an option either.
Because 420 is the universal number indicating it's time to smoke some weed, it was easy to laugh off Musk's tweet as just one of his weird jokes. He seems certain that the money is there in a follow-up tweet later in the afternoon. Chinese tech giant Tencent owns nearly 5%. There will likely be complaints from big traders and hedge fund managers. The company declined to comment.
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