Tesla to remain public thanks to shareholder pressure
Telsa will remain a publicly traded company after a handful of weeks of its future being in limbo. After share prices fell following Elon Musk‘s drive to take Tesla private, shareholders met with him to voice their displeasure – and it seems to have worked.
Speaking on Friday on a post on the Tesla website, Musk explained that the company would be remaining public. The reason? Pressure from shareholders over the company’s future.
“Given the feedback I’ve received, it’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company,” wrote Musk. “There is also no proven path for most retail investors to own shares if we were private.”
Musk also outlined how Tesla’s shareholders were non-too-keen on his approach to business, but would reluctantly stay with the company regardless. “Although the majority of stakeholders I spoke to would remain with Tesla if we went private,” he explained, “the sentiment, in a nutshell, was ‘please don’t do this'”.
Taking Tesla private could have seen the company’s shares going for $420 (£325) per share. That would have been an improvement upon the cost of shares following Musk’s initial “considering taking Telsa private” tweet, which caused the company to trade down 4% – although prices closed at $308, 1% up on its morning price.
It appears that, despite all the turmoil around Musk’s tweet, it’s not for these reasons that he’s concerned about continuing his idea of going private. In the same post, Musk explained that he “knew the process of going private would be challenging, but it’s clear that it would be even more time-consuming and distracting than initially anticipated.
“This is a problem because we absolutely must stay focused on ramping Model 3 and becoming profitable.” We will not achieve our mission of advancing sustainable energy unless we are also financially sustainable.”
However, the debacle of going private may not be over for Musk. The Securities and Exchange Commission (SEC) has had its eyes on Musk following his tweets, with the New York Times reporting that they issued him with a subpoena over it. If true, this would mark the first stage of a formal enquiry into Tesla, a worrying development for Musk.
If the SEC find him in breach of securities law by claiming to have funding for going private, it could make things very tricky for the CEO and Tesla as a whole – even if they no longer go private.
Musk summarised his post, and his stance on Tesla’s future, by doubling-down on what matters most to the company: “building products that people love and that make a difference to the shared future of life on Earth.”
Lead image: Steve Jurvetson, used under Creative Commons