Elon Musk tweets Tesla could go private; TSLA stock soars

FILE: Tesla CEO and founder of the Boring Company Elon Musk speaks at a news conference in Chicago. (AP Photo/Kiichiro Sato)

Tesla CEO Elon Musk's surprising proposal to take the electric car maker private has prompted regulators to suspend trading in the company's stock.

The unusual step taken early Tuesday afternoon came shortly after Musk dropped a bombshell on his Twitter account by announcing he had lined up the financing to buy all of Tesla's stock at $420 per share.

"Am considering taking Tesla private at $420. Funding secured," Musk tweeted, following up with "good morning" and a smiley emoji.

That would cost about $70 billion, making it one of the biggest buyouts in U.S. history.

The disclosure initially raised questions whether the eccentric Musk was joking, but he then amplified on his plan in a subsequent tweet that said he intended to create a special fund that would allow all current Tesla shareholders to retain a stake in the car maker if they want.

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.

The company'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 a 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. The figure even drew some jokes on Twitter about whether it was a pot reference, with 420 being a common slang term for marijuana.
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.
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