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Elon Musk Mystique and Tweet about Going Private Lift Tesla

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” 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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Source: Human Events

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