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19th of August 2018

Automotive



Elon Musk Proposes Taking Tesla Private - Motor Trend

"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 said.

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Musk then outlined how he imagines a privately held Tesla would work. Shareholders would be given the choice to either remain an investor or be bought out at $420 a share, a 20-percent premium over the company's stock price after its second-quarter earnings call last week. Employees would still be able to sell shares and exercise stock options periodically.

The move could be seen as a way for Musk to gain more control over Tesla, but the CEO says that's not his intent. "I own about 20 percent of the company now, and I don't envision that being substantially different after any deal is completed," he said.

"Basically, I'm trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible," he went on to say.

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The proposal comes on the heels of Tesla's Q2 earnings report, which revealed the company lost more than $700 million during the three-month period. Still, the company was optimistic about achieving profits in the third and fourth quarters thanks to Model 3 production finally getting on track. Following the release of the earnings report, Tesla's stock price shot up nearly 10 percent. At close of trading on Tuesday, Tesla's stock was up nearly 11 percent at $379.57 per share.

Questions remain as to where Tesla will get the funding for a buyout deal—though Musk claims to have it already—and whether or not the CEO violated any laws by announcing the plan via tweet before notifying investors. According to MarketWatch, a buyout to make Tesla a private company would be the largest in history, costing $72 billion excluding debt. But as Musk pointed out on Twitter, all of this is contingent on shareholders agreeing to go private in a vote.

Source: Tesla, MarketWatch 1, 2

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