Elon Musk’s Tesla going private a ‘win-win’ for everyone, investor says

At first, shareholders thought Elon Musk’s tweet about potentially taking Tesla private was some type of joke – or worse, a sign his account had been hacked. Now, some are saying it’s one of the best things that could happen to the billionaire investor’s company.

“The way he’s talking, he wants to keep existing shareholders whole, which means he won’t have to raise that much money to buy out the rest, essentially,” Ross Gerber, the CEO of Gerber Kawasaki, said on Tuesday during an interview with FOX Business’ Liz Claman. “This is a win-win for everybody.”

Musk sent shares into a frenzy on Tuesday when he wrote in a now-confirmed tweet that he’s considering taking the company private, and has already secured the funding. Although briefly halted, Tesla resumed trading on the Nasdaq exchange after a nearly two-hour pause, with shares rising more than 10%.

“As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders,” Musk wrote in an online post. “Being public also 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.” Gerber suggested the financier could be coming from Saudi Arabia, following a report by The Financial Times that Saudi Arabia’s sovereign wealth fund -- which is overseen by crown prince Mohammed bin Salman -- has reportedly invested heavily in Tesla, building up a stake between 3% to 5%. That’s worth about $1.7 billion to $2.9 billion at Tesla’s current share price.

And for Saudi Arabia, Gerber said, that sum of money they’ve already invested is “like a penny,” so for them to pour $20 billion or $30 billion into the company could be a legitimate option.

“The money is coming from Saudi Arabia,” he said. “They’re very desperate to diversify their economy there, and move away from [an] oil-based revenue stream, which is how they’ve always survived. Tesla makes a lot of sense for them as an investment, and a strategic partner.”

Although Musk said he’s considering taking the company private at $420 per share, Gerber said he hopes to see the stock begin trading around $380 to $400.

Tesla closed on Tuesday at $379.57 per share.

“It shouldn’t trade more than that, unless investors very much jump on the bandwagon here and push the stock over $420, basically saying, ‘We don’t want you to give the company this cheap,’” he said. “Because $420 is a very cheap price for Tesla based on our estimates.”