Tesla CEO Elon Musk Considering Taking Company Private
ARI SHAPIRO, HOST:
It's been a dramatic day for the car company Tesla and CEO Elon Musk. Earlier today, Musk announced on Twitter that he is considering taking the company private. NPR's Jasmine Garsd is here to walk us through why Musk might consider such a move and what it could mean for the company. Hi, Jasmine.
JASMINE GARSD, BYLINE: Hi, Ari.
SHAPIRO: Elon Musk is known for sarcastic and joking tweets. Is he serious about this?
GARSD: That's what everyone was wondering today. He started tweeting, which, by the way, is his favorite method of communication. And his first tweet was right before 1 o'clock p.m., saying, I am considering taking Tesla private. And as the day progressed and more details were tweeted out, it became clear that, yes, he is serious about this.
At around 2 p.m., the stock market halted trading of Tesla shares, and later Elon Musk himself sent an email out to Tesla employees in which he explained that he really is going to consider taking the electric car company private at the price of $420 a share.
SHAPIRO: Why would he want to do that?
GARSD: Well, Musk has always expressed annoyance at being the CEO of a publicly traded company and the way that beholds him to investors, the fact that he has to do these quarterly earnings reports and explain himself and his every move to investors. And in fact, in one earnings call this year, he got so annoyed he called an analyst's question boring and boneheaded. And he later apologized.
But in an email, Musk also talked about Tesla's short seller problem. Tesla is known for attracting a significant number of short sellers, investors who bet against the company. They profit when the company's stock drops. And Musk suggested that going private would end what he calls short sellers' negative propaganda campaign against Tesla.
SHAPIRO: Even if Elon Musk prefers Twitter as a means of communication, it seems pretty unusual for a corporate leader to announce something like this in a tweet, right?
GARSD: It's totally unusual. CEOs never do this. They don't take to Twitter and say, we're considering this move, especially something as momentous as this. This is huge. And it shows how unorthodox Musk is. And that's been both a strength and a weakness for him. It's garnered him this cult following. People love him because he's so colorful. He doesn't talk in corporate speak. He's doing something different, and fans say he's made this car they love which they find beautiful. But among investors, this kind of rash, impulsive behavior on social media has caused a lot of anguish about Musk's stability and his ability to lead the company.
SHAPIRO: Well, what does this mean for investors?
GARSD: Well, Musk pledged to hold onto his stake in the company. He owns about 20 percent. He also said he hopes investors stay on board. This comes at a really pivotal time for Tesla. They recently released the Model 3 sedan with which they hope to cross over from being this luxury car to one for mass consumption, for the everyday person. And they're spending a lot of money to achieve this.
SHAPIRO: Do you think he can pull it off? I mean, what's it going to take?
GARSD: Well, that's the billion-dollar question. Actually it's a lot more than a billion dollars. Musk would have to raise tens of billions of dollars to take this company private. And in one of his tweets, he did say funding is secured, but he didn't clarify what that means or how much. I do want to mention there was a report earlier today in the Financial Times that Saudi's Public Investment Fund bought a 3 percent to 5 percent stake in Tesla. That's around $2 billion.
SHAPIRO: NPR's Jasmine Garsd, thanks a lot.
GARSD: Thank you. Transcript provided by NPR, Copyright NPR.