He stunned investors on Tuesday with a tweet saying he had already lined up the funding, and he told employees that it would relieve the electric car company of the “enormous pressure” of Wall Street’s expectations.
In a letter to Tesla workers that was posted on the company’s blog, Musk called his idea the “best path forward.”
“As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders,” he wrote.
He also said trading its stock publicly “means that there are large numbers of people who have the incentive to attack the company.” Musk has complained repeatedly about short-sellers, who profit when Tesla stock drops.
Musk, the CEO and largest shareholder, said on Twitter that the private funding valued Tesla at $420 per share. Tesla is already the most valuable automaker in the United States.
Musk’s tweet caused shares to spike
The plan would need shareholder approval, but Musk’s tweet sent Tesla stock spiking by almost 9%. Trading in Tesla was later halted for more than an hour before Tesla posted Musk’s letter to employees on its blog. It finished up 11%, at $379.
The stock had climbed slightly earlier in the day after the Financial Times reported that Saudi Arabia has quietly built a big stake in the company.
At first, Tesla had declined comment on Musk’s tweet, even as he casually engaged Twitter followers with more posts about his plans.
Musk said that he hoped all current investors would stay with Tesla even if it went private. He said he would create a special fund to allow that. Fidelity, the investment firm, has such a fund for its stake in SpaceX, a separate private company also run by Musk.
He pledged to hold on to his stake in the company, about 20%, no matter what. He said he was “super appreciative” of Tesla shareholders, and vowed to “ensure their prosperity in any scenario.”