suggestion on Tuesday that he would like to take Tesla Inc private may provide something the electric auto maker needs: a little debt relief.

"Am considering taking Tesla private at $420", he said.

At US$420 per share, a deal would be worth US$72 billion (S$98 billion) overall. Should the funding disclosure turn out not to be true, it could be viewed as "misleading", he warned.

Asked on Twitter whether Musk would continue to be CEO under such a scenario, he replied there would be "no change".

Tesla on August 1 reported that it had ended the second quarter with $2.78 billion in cash after spending $610 million in capital expenses, while its negative free cash flow narrowed.

Musk has been in a very public battle with these shorts for years. And the fact that the company has been burning through cash, and even asking suppliers to refund payments might make such a buyout fairly unlikely. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term.

If Mr Musk decides against going private, Mr Gordon said his credibility could take another hit, though one he could weather. Musk has had feuds with regulators, critics and reporters, and questions remain about Tesla's production and manufacturing difficulties, long-term demand for its cars and uncertainty over funding.


First, 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.

He pledged to hold on to his stake in the company, about 20%, no matter what. He said in his letter to employees he did not seek to expand his ownership.

Tesla reported an adjusted loss per share of $3.06 for the second quarter, which was larger than what analysts had predicted, and revenue of $4 billion, which beat analyst projections. He added: "The 16 percent premium to current share price may not be high enough to incentivize existing shareholders to support the sale".

It appears that Musk is hopeful that shareholders will simply hang in for the ride and willingly go private.

In a Tweet on Tuesday the billionaire entrepreneur wrote: "Am considering taking Tesla private at $420".

Raising both the debt and equity required for such a deal would be a challenge.

About an hour and 20 minutes after Musk's initial tweet, Tesla actually did halt trading of its shares, pending the release of news from the company.


"This is a boon for any bondholder at Tesla, because most of the bonds are convertible notes". And his tweet may have cost Tesla short sellers $1.3 billion, per CNBC.

Tesla did not immediately respond to a request for comment.

Musk does not share Wall Street's focus on profits and quarterly performance and is notoriously thin-skinned when it comes to criticism from analysts and investors.

Tesla shareholder Quint Tatro, managing director of Joule Financial, praised the idea as "brilliant", adding that "Musk is exhausted of dealing with all the challenges of being 'public'". "Plus, this is short squeeze rocket fuel after a nice quarter".

Without an official statement to back up the tweet, Nasdaq halted trading in Tesla shares shortly thereafter.

Short interest in Tesla on Tuesday stood at almost US$13 billion, according to S3 Partners, a financial analytics firm. 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.


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