A good idea, in theory.
In a surprise move, Tesla boss Elon Musk has revealed that he is investigating the possibility of taking the firm private. Following the announcement, Tesla shares shot up by an amazing 11%, though trading of their shares was suspended swiftly afterwards.
The first hint of Musk’s intentions came in the form of a tweet (of course), but it was then followed up by an email that he sent to all employees & investors. In that email, Musk said that all the financing required to take the company private was already secured, and if they decided concretely to go private, stakeholders would be offered US$420 a share, well above the US$379.57 that Tesla stock rose to before trading was suspended.
“Basically, I’m trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible.” – Elon Musk, CEO, Tesla Inc.
Musk rationalises the potential privatisation by saying that it would allow the company to move leaner and faster than it is currently. “Being public,” Musk said, “subjects [Tesla] to the quarterly earnings cycle that puts enormous pressure on Tesla to make decision that may be right for a given quarter, but not necessarily right for the long term.” He continued to explain that Tesla’s fluctuating stocks have also proved to be a “major distraction for everyone working at Tesla, all of whom are shareholders.”
He then cited SpaceX as an example of how privatisation has benefitted the company, which Musk says is “far more operationally efficient” as a result of its ability to focus almost entirely on its longer-term goals. A “nice premium” will be offered to shareholders that might not want to tie themselves to the risks involved, but Musk hoped that shareholders would remain steadfast and loyal to the firm and its intentions.
The outspoken brand boss then went on to say that the move to take Tesla private would not be for the foreseeable future, end of. Instead, he acknowledged that public listing would be the best position for the company, but only “once Tesla enters a phase of slower, more predictable growth” would such a move make sense.
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