Tesla surges after Elon Musk offers details about his 'financing secured' tweet
- Tesla CEO Elon Musk wrote in a blog post Monday that he left a meeting on July 31 with "no question that a deal with the Saudi sovereign fund could be closed."
- The blog post offers new details into Tesla's plan to go private at $420 per share, which the billionaire announced last week, saying funding had been secured.
- Shares initially surged to an all-time high, before wiping out all their gains as lawyers said the tweet may have broken securities laws and reports of the SEC investigating.
- Follow Tesla's stock price in real-time here.
Shares of Tesla surged as much as 3% in early-trading Monday, before paring their gains, after CEO Elon Musk published an update on his plans to take the company private at $420 a share.
Despite tweeting on Tuesday that funding had been secured, Musk's newest blog post appears to contradict that claim.
After meeting with the Saudi Public Investment Fund about their purchase of a 5% stake in Tesla, Musk said the delegation asked for another meeting, which took place on July 31.
"During the meeting, the Managing Director of the fund expressed regret that I had not moved forward previously on a going private transaction with them, and he strongly expressed his support for funding a going private transaction for Tesla at this time," Musk said. "I understood from him that no other decision makers were needed and that they were eager to proceed.
"I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving," he continued. "This is why I referred to "funding secured" in the August 7th announcement."
Tesla opened at $355 Monday, an 18% discount to the $420 Musk singled out in his tweet. That price "would only be used for Tesla shareholders who do not remain with out company if it is private," Musk said.
"My best estimate right now is that approximately two-thirds of shares owned by all current investors would roll over into a private Tesla."
Musk also said additional debt - a major concern of Wall Street analysts in Tesla's struggle to turn a profit - will not be necessary as part of a transaction to go private, and that any capital required will be raised through equity.
There are still few specifics for the timeline of leaving public markets. Musk says he will continue to talk to investors and advisers to "obtain a more precise understanding" of the intricacies of the deal. Many analysts - including those who are still bullish on the stock - say a deal to go private is unlikely.
"Doing our best with the limited information we have, we come to the conviction that Tesla is unlikely to go private, and anticipate the board will reject Elon Musk's offer or approach," New Street's Pierre Ferragu, who has a $530 price target for the stock, said in a report Monday.
"The go-private offer cannot fly for a simple structural reason: there is no material value in moving Tesla private. It therefore cannot justify enough of a public-private valuation spread."
Shares of Tesla are now up 13% this year, but still below their $362 price at the time of Musk's first tweet about going private around 1 p.m. Tuesday.
Following the announcement of Tesla's plans to potentially go private and reports that Saudi Arabia's sovereign wealth fund had amassed a 5% stake, shares surged as high as $389 - a new record. But doubts over the financing of a transaction to go private, and warnings from securities lawyers and experts that his tweet could have broken the law, wiped out most of the stocks' gains over the course of the week.
"I made the announcement last Tuesday because I felt it was the right and fair thing to do so that all investors had the same information at the same time," Musk said.
"If the board process results in an approved plan, any required regulatory approvals will need to be obtained and the plan will be presented to Tesla shareholders for a vote."
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