Tesla CEO Elon Musk speaks at the unveiling of the Model 3

Elon Musk might turn Tesla into a private company

At the moment, it's got lots of shareholders trading on the 'stock market'. But Musk would rather do his own thing – if the shareholders let him

The CEO of Tesla announced in a tweet (is that just the way we do big announcements now?!) that he's thinking of making the company private.

What it means: Business can choose whether they want to be private, i.e. owned by a couple of people, or public, i.e. listed on the 'stock exchange' for anyone and everyone to buy a 'share' of the firm and reap part of the gains.

Listing your company publicly can be a good way to raise money. It's easy for shareholders to buy and sell, meaning they're more likely to invest (because they can get out easy if they want). That also means you're sharing out the risk among a wider pool of shareholders.

But public companies need to report back to their shareholders every quarter, demonstrating success on a very short-term basis – not to mention follow a lot of regulations.

In a letter to his employees, Musk said he'd rather not face those pressures. He says he's got funders willing to buy all the shares off of existing shareholders at a slightly higher price than they're at now, and then he'll keep it private.

The thing is, Musk himself only owns 20% of the firm. And shareholders vote on big decisions like this – so unless he gets at least 31% backing, he can't actually make this decision on his own.

Recent articles

Reader Comments