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Will Elon Musk Really Take Tesla Private?

Elon Musk is the kind of guy who you suspect is up to something if he’s out of the news…

By editor , in The Public Markets , at August 8, 2018

Elon Musk is the kind of guy who you suspect is up to something if he’s out of the news for too long. After the debacle with the mini-submarine the other week, I pictured him regrouping inside some kind of criminal mastermind lair embedded in a rock formation on a secret island. Wherever he’s been though, he’s certainly back now – and with a 9-word bang: “Am considering taking Tesla private at $420. Funding secured.”

Now, discarding for the moment the question of whether this would be a wise move, is this even remotely a possibility? Expert estimates have placed the buyout figure at around $50 billion – and that’s if the board and main shareholders even want to entertain such an idea in the first place. Sure, Musk’s worth a buck or two, but could he seriously manage to raise $50 billion?

Aside from that is the question of what happened next. One should never underestimate the impact of a tweet, when that tweet comes from one of the world’s richest and most well-established men. Sure enough, Tesla’s shares finished the day up 11%. Great for Tesla, right? Well, the SEC might not think so. They’re already breathing down the firm’s neck after recent whistle-blower allegations, and if Musk can’t actually prove that he’s secured the requisite funding to make privatization possible, he could face legal action both from his shareholders and from the state. Why? It could be argued that he has artificially inflated the stock – a pump, if you will, by tweeting something sensational and, ultimately, misleading.

Still, the Tesla board have claimed that they new of Musk’s intentions and have met several times to discuss the idea. If this is the case, then we won’t have long to wait before we see how this plays out – and whether Musk could really pull off what would surely the biggest buy-out privatization in history.