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Elon Musk jolts Wall Street with tweet on going private

Wednesday, August 08, 2018

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NEW YORK, United States (AFP) — Controversial Tesla Chief Executive Elon Musk said yesterday he was considering taking the company private, sending shares sharply higher before trading was halted.

Musk, who has cut a controversial figure on social media and beyond, sent the financial world abuzz again around 1650 GMT, tweeting, “Am considering taking Tesla private at $420. Funding secured.”

Musk said in subsequent tweets that he would remain chief executive under a go-private transaction and that any deal would benefit shareholders.

“Am super appreciative of Tesla shareholders,” Musk said. “Will ensure their prosperity in any scenario.”

Musk, who has previously discussed possibly taking Tesla private, has had bumpy relations with Wall Street, often dismissing questions over financing.

Shares rose 7.4 per cent to US$367.25 before being suspended shortly after 1800 GMT.

Yesterday's gains following the tweet added to upward movement on the stock after The Financial Times reported earlier that a Saudi Arabian sovereign wealth fund had built a stake of between three and five per cent in the company.

Tesla did not immediately respond to a request for comment.

Musk's tweet comes as Tesla faces continued pressure to ramp up output of the Model 3 sedan, its first effort at the middle market.

The company began hitting production targets last month after missing a series of earlier benchmarks.

Tesla shares have been on the upswing since it reported on August 1 a bigger-than-expected second-quarter but signalled that it expects to reach profitability in the third quarter and remain in the black for the foreseeable future.

Musk's approach to a possible go-private transaction went against the grain of many companies that release major news in non-trading hours. By contrast, Musk made the initial comment on Twitter and then embellished on the remarks in a series of responses to users on the platform.

No stranger to controversy, Musk last month apologised for calling British caver Vernon Unsworth, who helped rescue 12 Thai boys from a cave a “pedo”, short for paedophile, after Unsworth spoke dismissively of the Tesla chief's proposal for bringing the boys to safety.

He has also had a prickly relationship with Wall Street, apologising last week to equity analysts after refusing to answer questions on a May investor call.

The billionaire Musk himself owns a bit more than 20 per cent of Tesla stock. He has frequently lambasted “short” sellers of Tesla shares — those who take bets that the stock will fall in value.

Following the company's surge after last week's earnings, Musk took aim again at a short-seller in a reposted short YouTube video that likened these investors to Hitler's last days.

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