Tesla shares were suspended this evening following a string of tweets by billionaire founder Elon Musk in which he said he was considering taking the company private, leading the stock to spike.
Tesla shares were up 7.39 per cent at the time of the hiatus and took off again when trading resumed nearly two hours later to close up 10.99 per cent at $379.57.
Musk raised eyebrows when he took to Twitter to claim he had secured funding to take Tesla private at a share price of $420. CNBC quoted a former US Securities and Exchange Commission chair as saying that Musk’s surprise announcement was “highly unprecedented… and raises significant questions about what his intent was”.
Tesla later put out a statement from Musk in which he said he wanted to get away from the “quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term”.
He also floated the idea that Tesla could go public again, once the car company “enters a phase of slower, more predictable growth”.
Initially there were suggestions that the vagueness of Musk’s tweets meant he might not have been serious, or even that he had been hacked.
Musk attempted to reassure investors, tweeting: “Def no forced sales. Hope all shareholders remain. Will be way smoother & less disruptive as a private company. Ends negative propaganda from shorts” – referring to market short sellers that have stalked the stock.
One investor, the CEO of Gerber Kawasaki Wealth & Investment Management, Ross Gerber, said he had “no intention” of selling his shares at $420. “The stock is worth $570 a share based on 2019 revenue. No way Elon, I’m keeping my stock,” he said on Twitter.
Tesla shares were already boosted following reports that Saudi Arabia’s sovereign wealth fund has built a three to five per cent stake in Musk’s company.
The past year has been rocky for Tesla financially and last week it posted a mixed bag of results. Revenue in the three months to 30 June was ahead of expectations at $4bn (£3bn), but its losses were steep at $742m.