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Elon Musk’s Tesla Claim Could Land Him in Regulatory Trouble

08 August 2018

"There's a lot of noise that surrounds a public company and people are constantly commenting on the share price and value", Musk said in 2015.

Several financial industry insiders were unclear why trading was halted, whether it's because Musk is trying to initiate a buyout or because he could be violating FCC regulations.

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In another Investopedia article, Why Public Companies Go Private, we lay out some of the straightforward reasons a publicly-traded company would choose to do just that - go private: "An acquisition can create significant financial gain for shareholders and CEOs, while the reduced regulatory and reporting requirements private companies face can free up time and money to focus on long-term goals".

However, Mr Musk has said he has no plans to do so and promised that the firm will be profitable in the second half of the year, barring any unforeseen events.

("Yes", Musk replied.) He expressed hope that current investors would stay with the company, later adding that shareholders could either "sell at [$420] or hold shares & go private".

Munster predicted a one-in-three chance that Musk will actually take Tesla private.

The most obvious equity partners for Musk would be a sovereign wealth fund such as Saudi Arabia's Public Investment Fund (PIF) or major technology investment funds such as SoftBank Group Corp's Vision Fund, bankers said. Short sellers borrow shares from other investors and then immediately sell them on the premise that they will be able to buy them back at a lower price later to replace they stock they borrowed.

Tesla's shares jumped as high as US$371.15 in afternoon trading before trading was halted.

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The head-to-head battle is scheduled to take place in November at Shadow Creek. Told about the idea later, Woods said: "I'm definitely not against that".

That is what the Tesla Inc. chief executive said in announcing an audacious plan to take his $60-billion-plus auto maker private.

Tesla completed an initial public offering of stock in 2010, largely because Wall Street provided a convenient vehicle to raise billions of dollars to finance its expansion. The company had a market value of $58 billion as of Monday's close.

Mr Musk's announcement was initially met with widespread scepticism, with many people connecting the proposed price to 420 being a common slang term for marijuana.

The US Securities and Exchange Commission (SEC) allows companies to use social media outlets like Facebook and Twitter to announce key information in compliance with its fair disclosure rules so long as investors have been alerted about which social media outlets will be used to disseminate such information.

Musk detailed his proposal in a blog post on the company's website hours after stunning the company's followers by casually tweeting that he might take it private, which sent shares rocketing. He also suggested the move could only be temporary as he stated "once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets".

It appears that Musk is hopeful that shareholders will simply hang in for the ride and willingly go private.

He also said he would not sell his stake.

But the market appeared to take him seriously with Tesla shares surging on the news.

Elon Musk’s Tesla Claim Could Land Him in Regulatory Trouble