3 Reasons Why Elon Musk Is 100% Right in Wanting to Take Tesla Private
Two hours after tweeting about the possibility of taking Tesla private for $420 a share, the company released a letter Musk wrote to employees about the plan.
Two hours after tweeting about the possibility of taking Tesla (TSLA) private for $420 a share, the company released a letter Musk wrote to employees about the plan.
"First, a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best," Musk said. "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."
Tesla shares rose 10% Tuesday to $377.39 per share. The stock remains 11% below Musk's $420 privatization level.
TheStreet says a private Tesla makes sense for at least three reasons:
Musk has big dreams for Tesla, ranging from semi trucks to sports cars to giant battery factories. That expansion is best done not having to worry about the stock price.
Musk likely realizes profits will remain elusive for Tesla, despite his assertions to the contrary.
Musk also likely realizes he will need to raise money, again despite his assertions, to fund his big dreams.
Despite the president's promise of no stimulus until after Nov. 3, there are no signs yet that this is the sort of correlated selling that leads to a deep correction.
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