The future of Tesla may be on a new path. Elon Musk, Chief Executive of Tesla Inc., tweeted that he is considering the idea of possibly taking his company private. In the recent tweet, he stated shares would run $420 each. The speculation is that the electric car company is facing challenges including fast growth and financial constraints. With the announcement, Tesla shares moved upward more than six percent.
Tesla Inc, it appears, has neither verified nor disclaimed the comment made by Musk. However, when asked point blank on Twitter if he was serious, Musk replied: “Yes….it saves a lot of headaches.”
The move to go private could be spurred by the fact that Musk is under a lot of pressure from his company right now. He is trying to prove to investors that he can, in fact, turn his money-losing company into a higher-volume manufacturer that will, in turn, prove highly profitable.
After the twitter announcement, the company had a market value of $58 million, with Musk having a 20 percent interest himself. With this kind of money at stake, Musk needs to make good on his promise, or lose a huge fortune himself.
An analyst from Elazar Advisors stated that they believed that Tesla thinks of tweets as a public disclosure. The analyst went on to say that they thought that Musk was indeed serious about his remark.
The U.S. Securities and Exchange Commission does allow companies to take advantage of announcing key information on social media platforms such as Facebook and Twitter, as long as the posts are in compliance with the fair disclosures rules.
Musk seems to be putting the use of social media to work for him. Whether the post was true, or he was trying to garner some interest in Tesla stocks, only time will tell. Until then, we will have to take him at this word, and see how this all plays out when or if the stock truly does go private.