Why does Musk want to take Tesla private? Three reasons why Musk wants to "sell" the company

On the morning of August 8, Beijing time, Tesla CEO Elon Musk said on Twitter that he hoped to privatize the company at $420 per share. After that, Tesla's stock price soared.

If the price announced by Musk is used, Tesla's market value could reach around US$71 billion.

Musk had hinted before that he wanted to take Tesla private. But Musk's proposal on Twitter still caught everyone by surprise.

According to analysis, Musk wants to privatize Tesla mainly for the following reasons.

Aligning with long-term shareholder interests

Private company owners can maintain control over every operating decision without violating shareholders’ quarterly expectations.

Musk said that going public "has put tremendous pressure on Tesla to make decisions that may be beneficial for the current quarter, but may not be correct in the long run."

Some professionals analyzed that Tesla's huge efforts to achieve the production target of 5,000 Model 3 vehicles last quarter did not bring about a return proportional to the effort. The stock price reacted coldly.

It would be better for Tesla if the company slowed production and perfected manufacturing in the near term. Tesla could stop worrying about hitting weekly production targets and focus on building a factory that is best suited for the future.

Boosting stock prices

SEC Chairman Harvey Pitt hinted on CNBC: "Musk has been complaining about market prices and short sellers, and then the stock price has quickly risen by a small amount of 5% to 8%. If his remarks are intended to drive the stock price, there is a possibility of manipulation and it may also be securities fraud. Setting a specific price for a potential privatization transaction is unprecedented, so his true intentions are very suspicious."

Tesla's stock price rose 8% after Musk's Twitter message.

Additionally, after going private, Tesla will now be able to repay approximately $900 million in debt with stock rather than cash.

Protecting trade secrets

As a private company, Tesla does not have to disclose information that could give competitors an advantage.

Tesla now needs to disclose debt levels, personnel changes, executive compensation, the number of cars produced and delivered, various lawsuits facing the company, recent personnel changes and the company's views on risks and competitors every quarter.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.