The electric car maker has ended a brief flirtation with the idea of going dark, CEO Elon Musk said Friday, citing shareholder resistance.
Tesla will remain a publicly traded company, CEO Elon Musk said in a blog post released on Friday, just weeks after floating the idea of going private in order to ward off short-sellers and volatility in the company’s stock.
In early August, Musk touched off a firestorm by saying on Twitter that he was considering taking Tesla private at $420 per share, adding that funding was « secured. » In the wake of that announcement, the billionaire and his company have been buffeted by skepticism, and the threat of a regulatory inquiry.
However, in a post on Tesla’s website, Musk cited resistance from shareholders, in addition to other regulatory hurdles, that rendered the proposition unattractive.
« Given the feedback I’ve received, it’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company, » Musk wrote. « There is also no proven path for most retail investors to own shares if we were private. »
Musk appeared to heed a growing furor among Tesla’s investors, with a few expressing their disapproval amid the CEO’s increasingly erratic public behavior.
« 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,' » Musk wrote.
ARK Invest CEO Cathie Wood, who predicted Tesla stock could reach $4,000 per share, told CNBC in an interview that Musk would sabotage his own goals for the automaker if the company went dark.
« By going private [Musk] would deprive Tesla of reaching his own priorities — mobility as a service, autonomous truck platoons, utility energy storage, even air passenger drones, » Wood told CNBC’s « Closing Bell » on Friday. « He’s got big plans, and he needs to scale these plans. We don’t think that it will happen nearly as effectively in the private markets as in the public. »
Musk, who’s waged a war of words against bearish investors betting on the stock to fall, said that going dark could prove more problematic than expected.
« I knew the process of going private would be challenging, but it’s clear that it would be even more time-consuming and distracting than initially anticipated. This is a problem because we absolutely must stay focused on ramping Model 3 and becoming profitable, » he wrote on Friday. « We will not achieve our mission of advancing sustainable energy unless we are also financially sustainable. »
In recent days, evidence mounted that cast doubt on Musk’s claim that funding for taking Tesla private was secured, as he claimed earlier this month. Musk was on the verge of hiring Morgan Stanley because the bank excels in rounding up financing from a wide array of sources, a person familiar with the matter told CNBC this week.
The decision to stay publicly traded may not keep regulators at bay. The Securities and Exchange Commission having served Tesla with a subpoena last week, as it looks into whether Musk violated securities laws by claiming he had funding for the maneuver.
Musk himself has been under pressure for his own conduct, especially in the wake of a widely circulated interview with The New York Times in which he discussed the toll of the « excruciating » year he has had leading Tesla as it raced to meet Model 3 production goals.
Below is the full blog post Musk posted to Tesla’s website:
–CNBC’s Chloe Aiello and Alex Sherman contributed to this article.
