Tesla Shares Race Past $420 Buyout Figure
December 23 2019 - 6:29PM
Dow Jones News
By Tim Higgins
A Tesla Inc. rally Monday took the stock above a symbolic
threshold of $420 a share, the price at which Chief Executive Elon
Musk last year said he wanted to take the electric-vehicle maker
private.
The new height also represents a U-turn in investor confidence
in the Silicon Valley auto maker, whose shares this year closed as
low as $178.97. A surprising third-quarter profit, the unveiling of
a new pickup truck and progress toward building Model 3 compact
cars in China have fueled the stock's rise.
After reaching as high as $422.01, Tesla shares finished the day
up 3.4% at $419.22. The stock has gained about 74% over three
months.
The $420 mark is a uniquely Tesla milestone. When Mr. Musk in
August 2018 wrote on Twitter that he wanted to take the company
private, it spurred months of upheaval.
At the time, the pronounced price was about 20% above where the
stock closed in the days before Mr. Musk tweeted. With Tesla
struggling to build its mass market Model 3 model, his announcement
was a surprise -- and it sent Tesla shares soaring.
But the enthusiasm quickly faded as investors realized that Mr.
Musk hadn't completed the funding to pull off the maneuver. An
investigation by the Securities and Exchange Commission ensued as
to whether Mr. Musk had misled investors with his tweets.
A settlement with regulators followed. The Tesla CEO paid $20
million, stepped down as chairman and agreed to have his material
statements overseen by the company's board.
The government revealed that Mr. Musk rounded up the
going-private offering price to the $420 from $419 to amuse his
girlfriend because the number is part of marijuana culture. Mr.
Musk further cemented his reputation in drug culture in September
2018 when he puffed on a marijuana blunt during a live-video
interview.
In the months that followed, Mr. Musk and Tesla faced continued
challenges in building and delivering the Model 3, the company's
bet that it can evolve from a niche luxury player into a car
company offering electric vehicles to mainstream buyers.
Mr. Musk, a prolific tweeter, ran into more trouble with the SEC
when he made a statement that the regulator considered a violation
of the earlier settlement. The two sides settled again this
year.
Since going public in 2010, Tesla has been among the most
shorted stocks as some investors gamble that the company is
overvalued -- drawing barbs from Mr. Musk.
For Mr. Musk, reaching $420 a share "is about the most
significant milestone for his investor credibility in the last
several years," said Gene Munster, managing partner at investment
and research firm Loup Ventures. "It shows that his intuition,
whether you view it as comical or not, his intuition is right."
As the stock surged Monday, Mr. Musk weighed in on Twitter:
"Whoa ... the stock is so high lol."
Write to Tim Higgins at Tim.Higgins@WSJ.com
(END) Dow Jones Newswires
December 23, 2019 18:14 ET (23:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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