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Elon Musk Explains Why Taking Tesla Private Is a SpaceX Idea

On Tuesday, Tesla’s CEO Elon Musk dropped the bomb from his usual bomber, Twitter. In a very short post, the billionaire said only this: “Am considering taking Tesla private at $420. Funding secured.
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Photo: cnbc.com
As expected, the market reacted promptly and Tesla’s stock jumping over 7 percent. This was because of a cumulative effect caused by the tweet and a rumor that Saudi Arabia’s sovereign wealth fund has been slowly buying into the company, now holding, according to The Financial Times, a $2 billion stake in Tesla.

Shortly after making his plan public – a plan some believed at first to be a Muskism – the billionaire sent an email to his employees, one he later made available on the company’s blog.

In short, Musk plans to take Tesla private at a price of $420/share. That means transforming the company from a publicly traded one into a private entity, in effect taking the stocks out of the open market.

Musk has criticized before the exposure – both financial and from “people who have the incentive to attack the company" - Tesla is subject on an open market, and says that by being private it could operate best.

“Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term,” said Musk.

To enforce his idea, Musk talks about his other business, SpaceX, “far more operationally efficient due to the fact that it is privately held.” Should the plan for Tesla go forward, the carmaker will likely copy the space company’s structure as far as investors go, meaning external shareholders and employee shareholders with the opportunity to sell or buy every six months.

As for the people who already have a stake in Tesla, Musk gives them one of two choices: either they can stay investors in a private Tesla, or they can be bought out at $420 per share. Also, Tesla employees will remain shareholders of the carmaker.

Musk says in his email – which you can read in full in the document attached below – that “a final decision has not yet been made” on this subject.
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About the author: Daniel Patrascu
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Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
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