Tesla CEO Elon Musk announced Tuesday that he is considering taking the electric car maker private, causing the company’s stock to spike.
Tesla’s stock was later halted.
In keeping with his unorthodox style, Musk made the out-of-the blue announcement in a terse tweet, and followed with a couple of more tweets later in the day. He said he may take the company private at $420 a share and already has secured funding.
“Am considering taking Tesla private at $420. Funding secured,” Musk tweeted, following up with “good morning” and a smiley emoji.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
His tweet came hours after the Financial Times reported that Saudi Arabia’s sovereign wealth fund had built a significant stake in Tesla Inc., but it was unclear if that was the funding Musk was referring to. The Financial Times, citing unnamed people with direct knowledge of the matter said Saudi Arabia’s Public Investment Fund had built a stake of between 3 and 5 percent of Telsa’s shares.
Tesla did not immediately respond to requests for comment, but he did respond to another tweet later in the afternoon.
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
He then went on to clarify further, saying shareholders can sell at $420 per share, or hold onto them and go private with the company.
Shareholders could either to sell at 420 or hold shares & go private
— Elon Musk (@elonmusk) August 7, 2018
Tesla’s shares were up more than 5 percent at more than $360.
It’s highly unusual for the head of a major company make a significant announcement in such casual manner. The tweet prompted questions about how serious Musk’s intentions were. His asking price of $420 would be 22 percent of Monday’s closing share price, and nearly 9 percent above the stock’s all-time closing high of $385.
Musk’s tweet came two weeks after Tesla revealed it had burned through $739.5 million in cash on its way to a record $717.5 million net loss in the second quarter, as it cranked out more electric cars.
Tesla has spent millions as it reached a goal of producing 5,000 Model 3 sedans per week by the end of June. The company says production is rising, with the goal of 6,000 per week by the end of August.
Musk pledged earlier this month to post net profits in future quarters, and he said he expects to company to avoid returning to the markets for capital and to be self-funding going forward.
Musk’s abrasive style has often been a source of friction with Wall Street. Earlier this year, he caused a stir during a first quarter earnings call when he angrily cut off two analysts whose questions annoyed him. The CEO apologized to those analysts during the second quarter call.
Musk’s other company, aerospace firm SpaceX, is privately owned.
A hold was placed on Tesla stock late Tuesday afternoon. More to come as this story develops.
The Associated Press contributed to this report.