He was persuaded by the shareholders, although Musk himself continues to consider it feasible.
The head of Tesla Elon Musk said that he refused the idea to buy the company from the stock exchange and transfer it to private status. This happened after Musk communicated with shareholders: some of them explained to him that they have institutional restrictions on the amount of investments in private capital.
According to the entrepreneur, if Tesla becomes private (and now the company is traded on the exchange and its value depends on many external factors), most small investors would not have a clear opportunity to invest in the company. The best solution at the moment is to leave Tesla as a public company, to focus on the profits and the release of Model 3, Musk said.
I knew that the process of transferring a company into a private company would be difficult, but it became clear that it would be even longer and more distracting than originally expected. This is a problem, because we absolutely need to focus on the production of Model 3 and making a profit. We will not achieve our mission of developing a sustainable energy sector unless it is financially stable.
Prior to this, Musk stated that he had received funding from the Sovereign Wealth Fund of Saudi Arabia, but no final agreements were signed.
Musk decided not to buy shares of Tesla from the exchange after communicating with investors
“The shareholders would support us, but they were in the spirit of” Please do not do this “,” explained the head of Tesla.
The head of Tesla Ilon Musk announced that he refused the idea to transfer Tesla to the status of a private company and to buy its shares from the exchange. According to him, this decision, which caused several scandals, did not please investors.
I communicated with shareholders and it turned out that most of them believe that Tesla is better to remain a public company. In addition, some institutional investors explained that they have restrictions on investing in private companies. Also, there is now no clear way that would allow most private investors to remain among the shareholders.
Despite the fact that most of the shareholders I spoke with would have stayed with Tesla in the event of leaving the exchange, the general mood was in the spirit of “Please do not do this.”
However, my confidence that we can get enough funds to buy Tesla from the stock exchange has only intensified.
Also, Musk explained that the process of buying shares from the exchange in reality would have been more complicated than previously thought, and the company better focus on the release of the “budget” Model 3 and making a profit. According to him, the company’s board of directors approved this decision.
Discussion of Tesla’s departure from the stock exchange began on August 7 – then Musk wrote on Twitter that he thought about buying out the company’s shares at $ 420 per share (about 20% more than they were trading at that time), and funding has already been secured.
Later he explained his words twice: it turned out that the funding was ready to provide the Sovereign Wealth Fund of Saudi Arabia, and although final agreements were not signed, Musk had full confidence in the fund’s support. With the help of tweets, he wanted to tell all investors about the news at once, instead of private communication with the largest of them.
After this, the US Securities and Exchange Commission began investigation of the Musk message, as it could damage the investors and contain unconfirmed information. Also on the head of Tesla sued two shareholders of the company, who played to lower the share price of the company and lost “hundreds of millions of dollars” on the growth rate after the announcement of the musk of possible withdrawal from the stock exchange.
On August 16, The New York Times reported that some members of the board of directors are concerned about the state of Musk and the state of affairs in Tesla, and now the company is thinking of hiring a co-head of a company that would help with business management. Musk himself told the newspaper that because of a very difficult year in Tesla he is very exhausted, he works for 120 hours a week and practically does not sleep.
His desire to make Tesla a private company Musk was announced on August 7 on Twitter, after which the shares grew slightly . Subsequently, however, the intention has caused confusion among the Commission’s US Securities and Exchange (generally these things are not done via Twitter), and several shareholders, who played on the Tesla shares on the slide, applied to the musk in court.