Tesla Shares Race Past $420 Buyout Figure
Electric car maker’s stock now worth more than what Elon Musk promised to pay in last year’s failed take-private bid
A Tesla Inc. TSLA 3.36% rally has taken the stock above a symbolic threshold Monday, the $420 a share at which Chief Executive Elon Musk last year said he wanted to take the electric-vehicle maker private.
The new height of $422.00, up more than 4% in midday trading, also represents a U-turn in investor confidence after sentiment was shaken in the Silicon Valley auto maker, with shares closing as low $178.97 in the past year. 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. Tesla shares are up about 74% from $241.23 on Sept. 23.
The $420 mark is a uniquely Tesla milestone. When Mr. Musk in August 2018 wrote on Twitter that he wanted to take-private the electric auto maker it spurred months of upheaval
The price in 2018 represented a slightly greater than 20% premium from where the stock closed in the days before he made the announcement. The effort to take the company private, though, quickly went up in smoke when it became clear that such a move was harder to pull off than first imagined.
The surprise announcement—at a time Tesla was struggling to build its mass market Model 3 model—sent Tesla shares soaring, only to crash later when investors realized Mr. Musk hadn’t completed the funding to pull off the maneuver. It spurred an investigation by the Securities and Exchange Commission that alleged Mr. Musk misled investors with his tweets.
The SEC and Mr. Musk later settled the case. The Tesla CEO paid $20 million to settle that case, stepped down as chairman and agreed to have his material statements overseen by Tesla.
The government revealed that Mr. Musk rounded up the offering price to the $420 price 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 of last year when he appeared during a live-video interview puffing a marijuana blunt.
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, also later ran into more trouble with the SEC when he made statement the regulator felt violated their earlier settlement. The two sides settled this year.
Since going public in 2010, Tesla has been among the most shorted stocks, with some investors gambling the company is overvalued.
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.”