Wall Street will have to assess the surprise decision, announced Friday night that Tesla will remain a public company after co-founder Elon Musk abandoned plans to privatise the company.
The news could see a big sell off in Tesla shares when trading resumes tonight.
Tesla shares closed at $US372.19 on Friday (before the blog post), up 5.67% for the week, but well under the high of $US379.57 the day after the tweet from Musk.
The shares had been trading around $US341 the day before the tweet on August 7 and was one of the most shorted stocks on Wall Street. Musk’s tweet forced the shorts to cover some of their positions which pushed the shares higher.
They hit a high of just over $US389 but soon retreated. They never got near the mooted $US420 a share price suggested by Musk in his tweet.
The decision was communicated to the Tesla board on Thursday, and came nearly three weeks after Musk revealed in a nine-word tweet that he was considering taking the company private. That tweet and the price of $US420 a share is being investigated by US regulators.
“I believe the better path is for Tesla to remain public,” Mr Musk wrote in a blog post on Tesla’s website on Friday night.
He said the board had indicated its agreement. Mr Musk said he reached his decision after discussions with shareholders and advisers from Silver Lake, Goldman Sachs and Morgan Stanley about how his ambition might be achieved.
“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,” he wrote. “Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don’t do this’.”
Six of Tesla’s board members confirmed in a statement that Mr Musk had informed them of his decision and they added that the chief executive had their full support.
“The board and the entire company remain focused on ensuring Tesla’s operational success… and we fully support Elon as he continues to lead the company moving forward,” the board statement said.
