Chief Executive Elon Musk said on Tuesday he is considering taking Tesla Inc private in what would be the largest deal of its type, moving the electric vehicle maker out of the glare of Wall Street as it goes through a period of rapid growth under tight financial constraints.
Going private would reduce the market pressure on Tesla, especially from short sellers who believe Tesla is set up to fail and are pursuing strategies to profit from Tesla's troubles. After Musk tweeted that he had secured funding for the deal, which would value the company at more than $70 billion, Tesla's share price jumped 7 percent before trading was halted at $367 a share. Musk tweeted that early access would have bugs and was not advisable since there would have to be a plan for something to go wrong.
Tesla's shares were up 6.5pc at $363.46.
At $420 per share, a deal would represent a 23 percent premium to Tesla's closing price on Monday. Musk explicitly notes that he does not intend to merge Tesla and SpaceX, and that the two companies will remain separate, even though the private-shareholder structure would be similar.
Shortly after that news, Musk tweeted again that current shareholders would have the option of selling their shares at $420 or holding them privately.
Separately, the Financial Times reported on Tuesday that Saudi Arabia's sovereign wealth fund, overseen by Crown Prince Mohammed bin Salman, has built an undisclosed stake of 3-5% in Tesla.
The stock was halted at $366.94 per share. "The 16 percent premium to the current share price may not be high enough to incentivize existing shareholders to support the sale".
Musk originally brought Tesla public in 2010 to help raise funds for the company's growth.
When Musk responded to one Model 3 owner's praise for the electric auto on Twitter and mentioned the upcoming Autopilot upgrade, another person asked the CEO about the changes v9.0 would have on Model S and X vehicles.
"I fundamentally believe that we are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we're all trying to achieve", he said. I wanted to let you know my rationale for this, and why I think this is the best path forward.
Tesla did not return repeated calls for comment from CNBC, nor did the Securities and Exchange Commission, as of this publishing. However, Musk said that Tesla's leadership has yet to make a final decision.