Elon Musk considers a private Tesla in tweet, shares jump

Elon Musk

Elon Musk

Musk, the CEO and largest shareholder of the electric vehicle maker, said on Twitter on Tuesday that he has secured private funding.

He also tweeted that his "hope is all current investors remain with Tesla even if we're private". Musk has had feuds with regulators, critics and reporters, and questions remain about Tesla's production and manufacturing difficulties, long-term demand for its cars and uncertainty over funding. Musk tweeted that early access would have bugs and was not advisable since there would have to be a plan for something to go wrong.

The two pieces of news helped move shares of Tesla up almost 6% in trading Tuesday, to $362 apiece. At $420 a share, Tesla would have a market cap of around $71 billion.

The contracts were bought minutes after the Financial Times, citing unnamed people with direct knowledge of the matter, reported Saudi Arabia's sovereign wealth fund has built a significant stake in Tesla. Such backers begged Musk on Twitter to be allowed to keep their shares, and Musk assured them that they could.

In a 2013 report, the SEC said companies can use social media outlets to announce important information, so long as they comply with regulations and "investors have been alerted about which social media will be used to disseminate such information".

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The stock since settled at $366.94 before exchanges halted trading, pending an upcoming announcement from the company.

In fact, Tesla has turned a narrow profit in only two quarters since it became a public company in 2010.

The company's shares were up more than 5 percent at more than $360.

Still, the tech-heavy NASDAQ exchange where Tesla is listed halted trading over the uncertainty of whether Musk's tweet may have violated any Securities and Exchange Commission rules that prevent company executives from making market-moving statements. In the future, once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets.

Tesla's CEO also laid out what he envisions as the ideal path for going private. Shares are up as high as 9% on the day.

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"I believe Tesla considers Tweets as public disclosure".

But asked if he would take legal action against Musk over the allegation, Unsworth said: 'If it's what I think it is yes'.

With shares at $369.90, short-sellers logged an on-paper loss of $977 million, according to financial analytics firm S3 partners.

George Galliers of Evercore ISI said he believed the tweet was serious.

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