San Francisco: In a surprise move, Elon Musk has announced to take his electric car maker company Tesla private at $420 per share. Tesla has been public since 2010. “A final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best. “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,” Elon Musk wrote to Tesla employees in an email on Tuesday.
According to him, being public also subjects Tesla to the quarterly earnings cycle that puts enormous pressure on it to “make decisions that may be right for a given quarter, but not necessarily right for the long-term”. 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. The news led to Tesla share going up to $343.84 at the end of trading on Tuesday.
Musk, who owns approximately 20 percent of Tesla at the moment, said he aims to structure the company in such a way so that all shareholders have a choice. “Either they can stay investors in a private Tesla or they can be bought out at $420 per share, which is a 20 percent premium over the stock price following our Q2 earnings call (which had already increased by 16 percent).
Musk said he wants all Tesla employees to remain, shareholders of the company, just as is the case at SpaceX. “The intention is not to merge SpaceX and Tesla. They would continue to have separate ownership and governance structures,” Musk wrote. (IANS)