Tesla CEO drops latest bombshell with $72B buyout proposal

Elon Musk

Musk also responded "yes" when a Twitter user suggested taking the company private would save "a lot of headaches". "Funding secured", Musk said in a tweet shortly before 1 p.m. Musk discussed the plans further in a blog post later Tuesday.

Tesla's shares were up 6.5 percent at $363.46.

Musk pledged earlier this month to post net profits in future quarters, and he said he expects to company to avoid returning to the markets for capital and to be self-funding going forward. About an hour and 20 minutes after the Musk tweet, trading in Tesla stock was suspended because the company was expected to release news. "Either they can stay investors in a private Tesla or they can be bought out at $420 per share, which is a 20 percent premium over the stock price following our Q2 earnings call".

Earlier in the day, the Financial Times reported that Saudi Arabia's sovereign wealth fund, overseen by Crown Prince Mohammed bin Salman, has built an undisclosed stake of between three and five per cent stake in Tesla.

The confusion caused by Musk's Tuesday announcement via Twitter also prompted regulators of the Nasdaq stock market to temporarily suspend trading in Tesla's stock.

Former SEC chairman Harvey Pitt spoke up about the matter to CNBC, noting that Musk's tweet "might constitute fraud if any of the facts he disclosed are not true" or if there's any indication that his tweet was sent for the goal of boosting Tesla's stock price by soliciting investor hope.

Tesla's shares were at $362.74 prior to the share halt being lifted.

His US$12b Tesla stake would presumably be rolled into the private enterprise.

A leveraged buyout of Tesla, which went public in 2010 on Nasdaq and which sports a market capitalization of almost $64 billion, or other take-private transaction would represent an abrupt change in financial strategy. Intentions to buy out public shareholders usually need to be filed with the Securities and Exchange Commission, or SEC.

Musk said the final decision on whether the company goes private will be subject to a shareholder vote.

The electric auto maker reported revenue of $4 billion in the second quarter of 2018, with $2.2 billion in cash in hand.

And yet it also left many questions unanswered, namely how Musk - who owns nearly 20 percent of the company - would be able to come up with the $66 billion necessary to complete the transaction.

Despite the unconventional method of disclosing such information, analysts took Musk at his word.

Tesla doesn't meet the typical profile of a company that can raise tens of billions of dollars of debt.

Musk has a long history of bristling at the amount of scrutiny Tesla endures from investors and media.

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