NEW DELHI: From giving a tearful interview to tweeting about the future of his e-vehicle firm Tesla, billionaire Elon Musk is going through an eventful phase. After announcing earlier this month that he is reconsidering to remove Tesla from the stock exchange, Musk late on Friday took a U-turn and said that Tesla will remain a public company.
“Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don’t do this,’” Musk wrote in a blog post.
Musk referred to the process of taking Tesla private as “even more time-consuming and distracting than initially anticipated.” He said this is a problem and the company “absolutely must stay focused on ramping Model 3 and becoming profitable.” Over the past year, Tesla repeatedly failed to meet production goals for the Model 3, its most affordable electric car.
Musk on August 7 tweeted that he wanted to take Tesla private at $420 a share and had “funding secured.” He said it would avoid the short-term pressures of reporting quarterly results.
The announcement had created a shockwave among investors and drew scrutiny from the US market regulator Securities and Exchange Commission, which remained sceptical whether the tweet was made to fluctuate stock prices. There was also limited clarity on whether Musk has ‘funding secured’ to take the private route.
Tesla stocks jumped 11 per cent on August 7, the day Musk first tweeted about his plan to take the company private. But since then, the stocks have declined around 15 per cent and were last trading at $322 per share at NASDAQ.
On the secured funding part, Musk reiterated his statement on Friday and said “there is more than enough funding to take Tesla private.” He said that he was advised by Silver Lake, Goldman Sachs and Morgan Stanley on the possibility of going private.
Another challenge, which according to Musk prevented him to pursue the idea of going private was the ‘compliance issues.’
“A number of institutional shareholders have explained that they have internal compliance issues that limit how much they can invest in a private company. There is also no proven path for most retail investors to own shares if we were private,” Musk wrote, ending his blog by saying, “I’m incredibly excited to continue leading Tesla as a public company. It is a privilege.”