Elon Musk mystique is a phrase that aptly explains the lofty valuation that investors have given his innovative electric car company, Tesla Inc. (NASDAQ:TSLA), transcending traditional financial metrics and including the CEO‚??s surprise Aug. 7 Twitter announcement about potentially taking the company private.
The automobile manufacturer‚??s share price soared 10.99 percent on Aug. 7, when billionaire Musk tweeted that he is considering privatizing Silicon Valley-based Tesla at $420 a share, offering a premium of 19.89 percent above the company‚??s closing price on Aug. 6. That jump followed the company‚??s 16 percent climb to $349.54 on Aug. 2, after the announcement of better-than-expected second-quarter financial results late the day before.
NASDAQ halted trading in Tesla‚??s shares from 2:30-3:45 p.m. EDT on Aug. 7 after Musk tweeted that the funding for a privatization already has been ‚??secured‚?Ě but he added that such a leveraged buyout (LBO) would require yet-to-be-obtained shareholder approval. Based on the proposed $420 per share price, Tesla would be valued at roughly $70 billion and become the biggest LBO in history. The deal‚??s size would more than double the previous largest LBO of $33 billion for hospital operator HCA Inc., in a combined equity and debt deal privatization on November 16, 2006.
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Paul Dykewicz, www.pauldykewicz.com,¬†is an accomplished, award-winning journalist who has written for Dow Jones, the¬†Wall Street Journal, Investor‚??s Business Daily,¬†USA Today,¬†the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and¬†DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports.¬†Paul previously served as business editor of Baltimore‚??s Daily Record newspaper. Paul also is the author of an inspirational book, ‚??Holy Smokes! Golden Guidance from Notre Dame‚??s Championship Chaplain,‚?Ě with a foreword by former national championship-winning football coach Lou Holtz.