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Tesla shareholder tells IGTV he’s 'not thrilled' about the take-private plan

Ross Gerber, CEO of Gerber Kawasaki and shareholder in Tesla, told IGTV’s Victoria Scholar that he is not thrilled about the idea of going private and we shouldn’t listen to the Tesla analysts because ‘every Wall Street analyst is dead wrong’ on the stock. He thinks Tesla will rally above $420, which could prompt a buyout. Gerber has a $571 price target on the stock.

Tesla shares closed up 11% on Tuesday after chief executive Elon Musk tweeted, ‘Am considering taking Tesla private at $420. Funding secured.’

According to MarketWatch, that single tweet caused mark-to-market losses for the short sellers of $1.5 billion. Tesla shareholder, Ross Gerber, told IGTV he initially thought Musk’s Twitter account had been hacked, before the announcement was confirmed by his investor relations representative.

Shares in Tesla were in fact already moving higher on Tuesday, before Musk’s tweet, on the back of a report from the Financial Times that Saudi Arabia’s Public Investment Fund (PIF) had taken a 3% to 5% stake in the electric carmaker worth $2 billion, which would make the PIF one of Tesla’s biggest shareholders.

Following Musk’s unexpected tweet, a letter was sent to employees, who are also shareholders, explaining his rationale in more detail. He said, ‘we are subject to wild swings in our stock price that can be a major distraction’ and being public ‘subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long term. Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.’

On Wednesday, shares in Tesla came under pressure as investors and analysts started to question how viable it would be to de-list the company. If Tesla were to be taken private at the tweeted price of $420, the deal would be worth more than $80 billion and would represent one of the largest deals of this kind on record. Further skepticism came on Thursday following a report from the Wall Street Journal that the US Securities and Exchange Commission (SEC) had ‘made inquiries’ into whether Musk’s tweeted claim that funding was secured was in fact truthful, prompting speculation about a potential SEC investigation. Ratings agency Moody’s Investor Service added to pressure on the stock by warning that a take-private move would be ‘credit negative’.

According to CNBC, Tesla’s board of directors will meet with financial advisors next week to examine the potential take-private option in more detail. Tesla shareholder Ross Gerber told IGTV he is ‘not thrilled’ about the idea. He thinks the stock could rally sharply above $420 and has a price target on the stock of $571. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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Ross Gerber, CEO of Gerber Kawasaki and shareholder in Tesla, told IGTV’s Victoria Scholar that he is not thrilled about the idea of going private and we shouldn’t listen to the Tesla analysts because ‘every Wall Street analyst is dead wrong’ on the stock. He thinks Tesla will rally above $420, which could prompt a buyout. Gerber has a $571 price target on the stock.

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