There are so many car companies in the world, some of them are considered incredibly luxurious since they have aged over time and are known to be timeless classics and its brand quality has been tested through time.
However, there is one particular company in the United States that seems to be changing the game when it comes to vehicles. Tesla, which was founded in 2003, is today’s leading car manufacturers in the world. Their CEO, Elon Musk, believes that technology is their best friend since they are basically aiming to be able to offer a highly advanced car with an affordable price.
It may seem all great for the company because of how much success they are actually getting, however, Musk posted a tweet a few weeks ago about how they can go private.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Musk Tweets To Go Private
It was one of his shortest tweets, but at the same time, it was also considered to be one of the biggest ones he has ever done. These kind of announcements are not normally done through a personal social media account, as if it is actually just nothing and would not affect anybody.
With over 22 million followers on Twitter, the CEO said that he is considering to actually turn Tesla into a private one with just about $420 per share if this decision has been made clear, then Tesla would be a $70 billion company.
It was in 2010 when Musk took the company public because of the initial public offering. At that time, the stock was actually sold in public exchange, wherein Nasdaq got it. It is technically normal to go back from private once a company decided to go public once, eventually they would have to go through a leveraged layout wherein they would borrow millions of dollars to be able to buy every share back from the shareholders.
Absolutely. Am super appreciative of Tesla shareholders. Will ensure their prosperity in any scenario.
— Elon Musk (@elonmusk) August 7, 2018
In fact, the Tesla CEO has admitted that he has already thought about this and has already lined up all the things that he would be needing to achieve it. Once they have successfully bought all the stocks from the public shareholders, then Tesla would then be removed from the list of public stock exchange as well as from the remaining stakeholders.
That is because the private shares may not be traded with any public exchange. However, Musk stated that he would prefer if their shareholders remain instead of agreeing on being bought out.
Experts said that there are tons of reasons why Musk think that it is best for Tesla to go private. One of those reasons may be the fact that the Wall Street is always under the nose of Musk because they would then require him to report their quarterly numbers, which is a requirement to a public company.
There was even a controversy a couple of months ago when Musk actually referred to a question as boring when he was talking to the Wall Street. By going private, they would no longer have to keep on bugging him every single time about quarterly financial goals of the company.
A Change Of Heart
When Musk tweeted about taking Tesla to the private route, the shares went to the roof. This definitely took the market-watchers by the news. However, this didn’t exactly last long since last Monday, Musk actually had a change of heart and took back what he said about a Tesla going private. It took him more than two weeks to give a final decision, but it turns out that he just caused a stir and wouldn’t be pursuing the privatization.
On a blog post that he said on the official website of Tesla, Musk said that it turns out that most of their shareholders at the moment actually think that it would be best for the company to actually stay as a public one. He also said that the shareholders won’t be able to have as much freedom because they “have internal compliance issues that limit how much they can invest in a private company.”
However, Musk almost mentioned that most of their shareholders would be willing to stay even if they choose to go private. He also admitted that the process of going from public to private would require tons of preparation and time, so would be incredibly challenging for the company. This would then distract them from actually producing their newest vehicles like the Model 3 sedan.