Tesla CEO Elon Musk will not be taking the company private after all. Musk sent a memo to his employees that was obtained by Inverse, which explains why, after two weeks of uncertainty, the entrepreneur changed his mind.
The fate of Tesla’s stock came under scrutiny on August 7 when Musk tweeted that he was considering taking the company private, having “already secured” funding to buy back stock at $420 a share. The tweet catalyzed two separate lawsuits filed against Tesla by investors claiming Musk’s online behavior violated federal securities laws and resulted in an SEC inquiry. On Saturday, Musk announced on Tesla’s website that he would not be moving forward with the plan, citing shareholder resistance and logistical hurdles.
“After giving this a lot of thought, I have come to the conclusion that the best path for the foreseeable future is for Tesla to remain a public company,” Musk said in an email to Tesla employees. “There are certainly a number of very compelling reasons to go private, so this is far from an obvious decision, but, on balance, being public appears to best serve the interests of the people of Tesla and those who have invested in our future.”
Had Musk carried out the plan he tweeted earlier this month, the move would have ended Tesla’s position as the most shorted stock in the US Stock Exchange, an aspect of public trading he has vocally opposed. When Musk first tweeted about the potential move, Tesla’s stock price jumped more than 13% above the prior day’s close. This was an obvious boon for Musk, who owns a fifth of the company, but had consequences for short sellers who bet on share prices falling.
According to Musk, shareholders convinced him to reconsider by pointing to the regulatory standards in place for such a transition, which would make wealth creation harder for Tesla’s small investors. “Couldn’t make it happen, even through expert fiduciary [Special Purpose Vehicle], without creating exotic trust structure that would probably not be accepted by regulators,” Musk explained in a tweet.
While it still remains to be seen whether Musk had, in fact, secured funding, with efforts to take Tesla private now ceased, the company can focus on ramping up production of the Model 3, as stated in the public announcement on the company’s website. Of course, that didn’t stop Musk from bragging that he still could take the company private if he wanted to, stating “my belief that there is more than enough funding to take Tesla private was reinforced during this process.” He’ll no doubt continue to make that point, even if it’s currently moot.