Tesla Inc TSLA shares spiked Tuesday, first on reports of a $2 billion Saudi stake and then on news of a potential move off the public exchanges.
Tesla’s stock rose more than 4 percent after Saudi Arabia’s sovereign wealth fund was reported to have built a 3-percent to 5-percent stake in the company. Minutes after the investment was revealed, CEO Elon Musk added another 3 percentage points to Tesla’s daily gains.
Musk tweeted that he was considering taking Tesla private at $420 — an 18-percent premium to where Tesla traded before the announcement. He claimed to have the funds necessary to complete the transaction.
About 30 minutes after the original tweet, Musk reiterated the "420" comment.
Update: Musk tweeted at 3:36 p.m. that, "Investor support is confirmed. Only reason why this is not certain is that it’s contingent on a shareholder vote" and he also penned a blog post explaining his actions.
Why It’s Important
As it is, Tesla has had a wild time in the public markets, with its stock suffering $100 drops and riding $100 pops in a matter of sessions. Many experts considered the volatility a risk and deterrent to investing in Tesla.
Recently, too, the firm’s ability to continue raising capital from public investors has come into question. The automaker has proven unreliable in hitting metrics, and many on the Street have become impatient with delays in critical product lines.
Tesla’s departure from the markets, particularly with such significant upside, would prove painful to many betting on Tesla’s failure. Shorts recently represented 27 percent of Tesla’s float.
Benzinga has reached out to Tesla, but the company has not released an official statement confirming or denying Musk’s sentiment. The stock traded around $365.50 at time of publication, up 6.8 percent on the day.
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