Tesla’s stock (TSLA) has hit $420 per share, which is the “funding secured” that CEO Elon Musk wanted to use to take Tesla private, and eventually cost him millions of dollars in fines from the SEC.
Now Musk gets the last laugh.
Last summer, Musk tweeted that he was thinking about taking Tesla private, and that the funding was “secured” at $420 per share, which was a significant premium on the price of the stock at the time.
Musk ended up being investigated by the Securities and Exchange Commission (SEC), who believed Musk exaggerated by claiming that the funds to take Tesla private, which would have required billions, were “secured.”
They believed that his announcements artificially inflated Tesla’s stock price due to shareholders believing that outside investors were willing to pay $420 per share.
It was later revealed that Musk did have talks with Saudi Arabia’s sovereign fund, as well as other potential investors, but Musk said that he gave up the idea because it would negatively affect some smaller individual investors who would wish to keep their investment in Tesla.
In September 2018, the CEO eventually settled with the SEC and was forced to step down as chairman of Tesla and pay a $20 million fine.
Tesla’s stock price hit some tough times after that, but it has since recovered, and earlier today, over a year later, it hit the price of $420 per share:
Tesla’s stock has been on a tear over the last few weeks and today, it was again significantly up after it was announced that Tesla secured $1.4 billion in loans from Chinese banks and the automaker also started releasing a new software update to its fleet.
The new price brings Tesla’s valuation to over $76 billion.
Well, Elon is getting the last laugh here.
Quite literally since Musk reacted to the news with some crying laughing emojis:
— Elon Musk (@elonmusk) December 23, 2019
The CEO’s compensation is entirely based on stock options, and he stands to make tens of billions of dollars if Tesla’s valuation keeps increasing and the company becomes profitable.
But in this case, I think he is most likely reacting to the fact that many people didn’t believe anyone would buy Tesla at $420, which is clearly not the case, because people are buying it now.
Some people also think that Elon set the $420 price as a reference to cannabis culture, but I really doubt that’s the case.
Even it didn’t work out, the effort to take Tesla private was quite serious. I think he really thought that the price was appropriate at the time. Maybe he rounded up to $420, but that’s about it in my opinion.
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