Tesla Inc (NASDAQ:TSLA) shares went on a wild ride Tuesday afternoon, jumping after reports that Saudi Arabia’s sovereign wealth fund had acquired a US$2bn stake in the electric vehicle company and then stopping in its tracks when CEO Elon Musk tweeted that the company may soon go private.
The Saudi's Public Investment Fund bought a 3% to 5% stake in Tesla, according to a Financial Times report.
Shares of Tesla were up more than 7% to US$367.25 in Tuesday afternoon trading before trading was halted on impending news.
Tesla resumed trading at 3:45 PM EST after being halted since around 2:00 PM EST. Shares surged more than 12% to US$385.90.
On the heels of that came a tweet from CEO Elon Musk’s account, hinting that the company may soon go private.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Tesla did not provide an official response immediately, but later shared an email it sent to employees on its blog.
“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,” wrote Musk.
The CEO pointed to the “enormous pressure” put on the company by the quarterly earnings cycle, causing the automaker to make decisions right for the quarter but not necessarily right for the long-term.
“Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company,” he added.
The tweets
One Twitter user expressed concern about what going private would mean for long-time investors.
My hope is *all* current investors remain with Tesla even if we’re private. Would create special purpose fund enabling anyone to stay with Tesla. Already do this with Fidelity’s SpaceX investment.
— Elon Musk (@elonmusk) August 7, 2018
Electrek editor Fred Lambert asked the CEO via Twitter if he would maintain control over the company if it were to go private.
Musk responded, saying that he doesn’t currently have a controlling vote but would not be selling either way.
I don’t have a controlling vote now & wouldn’t expect any shareholder to have one if we go private. I won’t be selling in either scenario.
— Elon Musk (@elonmusk) August 7, 2018
Stopping short
Musk has been a long-time critic of short-sellers, lashing out via Twitter and during his infamous earnings call.
His most recent tweet cost shorts hundreds of millions of dollars.
Tesla short sellers lost around US$884 million in mark-to-market losses, according to estimates from fintech company S3 Partners shared by a CNBC report.
The total loss for Tesla’s short-sellers has been around US$2.4bn this year with 35 million shares held short.
Musk responded to another tweet confirming that there would be no forced sales and that a smooth transition would put an end to “negative propaganda from shorts.”
Def no forced sales. Hope all shareholders remain. Will be way smoother & less disruptive as a private company. Ends negative propaganda from shorts.
— Elon Musk (@elonmusk) August 7, 2018
--Updated to include recent share price and additional tweets--