Elon Musk says he wants Tesla to go private. He surprised investors Tuesday when he tweeted that he already has lined up funding and told his employees that going private would relieve the electric carmaker of the constant pressure of expectations on Wall Street.
A letter from Musk to Tesla workers was posted on Tesla’s blog and he called the idea the company’s “best path forward.”
Musk wrote that being a public company, means being subjected to the wild swings in the company’s stock price that cause huge distractions for everyone who works at Tesla, all of whom have shares in the company.
He added that trading stock of Tesla publicly means there are many people whole have an incentive to attack the business. On numerous occasions, Musk has expressed his displeasure over short-sellers, who profit when stock at Tesla drops.
Musk, the CEO at Tesla and its largest shareholder, said that the private funding had valued Tesla at a per share price of $420. Tesla already is the most valuable U.S. automaker.
Musk’s plan needs to receive the approval of shareholders, but the tweet by Musk sent Tesla shares soaring by nearly 9%. Tesla trading was halted for over an hour before Tesla posted the letter from Musk to his employees on the blog. The stock closed the day 11% higher.
The stock climbed slightly during the earlier part of Tuesday after a report was released that Saudi Arabia quietly built a large stake in the business.
Musk said his hope was that all current investors stayed with Tesla even if it made the decision to go private. He added that he would make a special fund that would allow that.
Musk pledged to keep his stake in Tesla at approximately 20%. He added that he is very appreciative of shareholders of Tesla and vowed he would ensure their prosperity for any scenario.
The electric-car maker has burned through large sums of cash while going through struggles with producing its Model 3 low price electric car.
That helped to drive its stock down and raised several concerns whether the carmaker would need to sell additional shares to pay for the expansion. There is no such need insists Musk.
Musk has clashed with critics repeatedly, especially investors that have used short position on Tesla stock, meaning they would benefit if the price of stock were to fall.