Elon Musk sent shares of Tesla into a frenzy on Tuesday, when the billionaire inventor wrote in an unconfirmed tweet that he’s considering taking the auto company private, and has already secured the funding -- language he should be sure to follow through on, according to Scott Galloway.
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“Is this a hoax? Is this him behaving errantly or irrationally?” the marketing expert said during an interview with FOX Business’ Connell McShane. “But when you say ‘funding secured’ in public markets and the stock goes up 7%, boy, there better be a there-there.”
Galloway said Musk likely wants to take the company private because he’s anticipating third- and fourth-quarter losses, and is tired of dealing with irate investors and the general demands of being a public company. (In May, Musk drew sharp criticism for what many described as a bizarre earnings call).
Tesla currently has a market value around $60 billion, which would make its take-private price tag about $80 billion, Galloway said. Shares climbed about 2% on Tuesday, and then soared after Musk tweeted. At 2:08 p.m. ET, Nasdaq reportedly halted trading of Tesla's shares.
“It’s not easy to take a company that’s losing money private,” Galloway said. “Unless there’s some sort of sovereign wealth fund.”
And according to a report by The Financial Times, Saudi Arabia’s sovereign wealth fund -- which is overseen by crown prince Mohammed bin Salman -- has reportedly invested heavily in Tesla, building up a stake between 3% to 5%. That’s worth about $1.7 billion to $2.9 billion at Tesla’s current share price.
What’s more unusual about the tweet, Galloway added, is that if it’s true Musk has a buyer lined up, he’s doing them no favors by publicly announcing the news.
“All he’s doing is making it more expensive and sort of thumbing his nose at analysts,” he said.