Elon Musk has called off his bid to take Tesla private, leaving investors stunned.
It was only on 7 August that Tesla CEO Elon Musk tweeted about his desire to see the company go private, with his post firmly stating “funding secured”.
In the weeks since, Musk has been on the receiving end of criticism from confused investors. An SEC investigation and fluctuating share prices made the notion of a buyout seem rather shaky.
Plans come to a screeching halt
It looks like the CEO’s wish to take the company off the public market won’t be coming true this time. Late on Friday (24 August), Musk wrote that he would heed shareholder concerns and stop pursuing the $72bn deal to take the luxury carmaker private.
Musk wrote that the feedback around the potential buyout made it clear to him that Tesla is “better off as a public company”. He said: “Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was: ‘Please don’t do this.’”
He added that he was initially aware taking Tesla private would be challenging but conceded that it would be “even more time-consuming and distracting than initially anticipated”.
Tesla needs to focus on profits
Musk noted that, as a company, Tesla needs to focus on building its in-demand Model 3 cars and eventually becoming profitable. He did reiterate that he believes there is more than enough funding to take Tesla private.
Musk concluded: “We’ve shown that we can make great sustainable-energy products, and we now need to show that we can be sustainably profitable. With all the progress we’ve made on Model 3, we’re positioned to do this, and that’s what the team and I are going to be putting all of our efforts toward.”
According to Reuters, German-listed shares in the company fell more than 3pc on the Tradegate exchange today (27 August). The company still faces a continued SEC investigation, as well as a number of investor lawsuits concerning Musk’s methods of publicising buyout plans.
A member of the Tesla board told the Financial Times that the board is “still very concerned about being hit by a wave of lawsuits”. A source close to some of the board directors also raised concerns about Musk’s use of Twitter.