Controversial Tesla (NASDAQ:TSLA) CEO Elon Musk took investors by surprise today when he tweeted that he is considering taking the electric car giant private at a share price of $420. However, Tesla had published an email Musk sent to employees stating that a final decision to take the company private had not yet been made.
The news helped push TSLA’s shares up more than 10% to $379.57. At the price mentioned in Musk’s tweet, Tesla would be valued at roughly $71.7 billion, 11% higher than its current market capitalization.
“Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote.” Musk stated.
Industry expert Gene Munster commented, “This story is still developing, but here are our preliminary thoughts. Our guess is there is a 1 in 3 chance he can actually pull this off and bring Tesla private. The 11% premium to current share price may not be high enough to incentivize existing shareholders to support the sale.”
“Musk does not want to run a public company. His mission for Tesla (to accelerate the globe’s adoption of sustainable energy) is both grand and long-term, making it difficult to accommodate investors quarterly expectations. He originally brought Tesla public in 2010, given he could no longer personally finance its growth, and has continually expressed his frustration with the company being public,” the analyst added.
The initial tweet came shortly after several media outlets reported that Saudi Arabia’s sovereign wealth fund, overseen by Crown Prince Mohammed bin Salman, has built an undisclosed stake of between 3% and 5% stake in the electric car giant.
Net net, according to TipRanks, Tesla stock has a Hold consensus rating from the Street with a spread of 10 Buy, 6 Hold and 8 Sell ratings in the last three months. Due in part to the recent share gains, analysts are predicting downside of 17.5% from the current share price.