Joe Skipper / Reuters
- Tesla CEO Elon Musk announced on Tuesday that he's considering taking Tesla private.
- The financial world is unsure how he would do this, given that the deal will be enormous.
- But from where Musk and Tesla now sit, going private makes sense.
Tesla CEO Elon Musk blew Wall Street's mind on Tuesday when, just after the Financial Times reported that the Saudi sovereign wealth fund had invested $2 billion in the company, he tweeted that he was considering taking the 15-year-old company private at $420 per share.
The total value of such a deal would be more than $80 billion, including debt. Musk owns 20% of the company, so on the equity side he'd need to finance something in the $50-billion ballpark.
In an email to employees that appeared after trading in Tesla shares was halted on Tuesday, Musk outlined his thinking and concluded, "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."
Throughout the day, the hazy mechanics of a possible deal were discussed. Is this even something that Musk can pull off?
Morality also seeped into the picture. Had Musk done something wrong by tweeting the news?
As Tesla stock surged toward its all-time highs after trading resumed, chatter turned to short sellers, a frequent Muskian target. Would they hang in there?
By the end of the day, the tech, autos, and financial commentariat was too exhausted by events to ponder some of the broader questions.
But a new day dawns! So we can take a close look at why a private Tesla makes perfect sense.
Get the latest Tesla stock price here.