Elon Musk will no longer take Tesla private

Billionaire entrepreneur and founder of SpaceX Elon Musk speaks at the 68th International Astronautical Congress 2017 in Adelaide on September 29, 2017.
AFP


The board of the electric car maker Tesla says the company will remain public – two weeks after chief executive Elon Musk said he was considering a deal to go private.

The plan was cancelled after a board meeting on Thursday, the company said.

Since Mr Musk announced his plan, Tesla’s share price has dropped by 20%.

He said he had told Tesla’s board “that I believe the better path is for Tesla to remain public. The Board indicated that they agree.”

Mr Musk said he had spoken with shareholders and major banks to consider the privatisation, in a statement published on Tesla’s blog.

He concluded it would be “even more time-consuming and distracting than initially anticipated”, and the sentiment from shareholders “was ‘please don’t do this’”.

Earlier this month, Elon Musk shocked investors by announcing on Twitter that he had funding secured to take Tesla private at a value of $72bn ($57bn).

It later transpired that he had not closed a deal with Saudi Arabia’s sovereign wealth fund, and unhappy investors launched a lawsuit against him after the news.

The billionaire entrepreneur has complained since floating the company on the stock market that quarterly scrutiny of Tesla’s finances encourages short-term thinking.

But in a follow up tweet after his blog post, he said talks with shareholders had persuaded him otherwise.

Tesla shares rose sharply on 7 August following Mr Musk’s suggestion he would take Tesla private, but have continued to fall since then.

The slide has been good news for short sellers, who bet that Tesla’s share price would fall.

Mr Musk has a well-known dislike of short sellers, whom he has called “jerks who want us to die” and has argued that taking Tesla off the stock exchange would shield it from their attacks.

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Tesla saw its share price fall after Mr Musk’s tweet

Shares fell even further after Mr Musk gave an emotional interview to the New York Times, in which he revealed his “120 hour weeks” and use of sedatives.

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Tesla has faced growing financial pressures this year as it works to build more of its Model 3 cars.

On 1 August, as Tesla reported another record loss, he said he expected the company to be profitable in the second half of 2018 and every quarter going forward.

But there is growing scepticism that Tesla can pull it off.

The company delighted investors with a surprise first quarter profit in 2013 thanks to sales of its Model S car – at the time the first profit in the company’s history.