Tesla Shares Race Past $420 Buyout Figure

By Tim Higgins 

A Tesla Inc. rally Monday took the stock above a symbolic threshold of $420 a share, the price at which Chief Executive Elon Musk last year said he wanted to take the electric-vehicle maker private.

The new height also represents a U-turn in investor confidence in the Silicon Valley auto maker, whose shares this year closed as low as $178.97. 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.

After reaching as high as $422.01, Tesla shares finished the day up 3.4% at $419.22. The stock has gained about 74% over three months.

The $420 mark is a uniquely Tesla milestone. When Mr. Musk in August 2018 wrote on Twitter that he wanted to take the company private, it spurred months of upheaval.

At the time, the pronounced price was about 20% above where the stock closed in the days before Mr. Musk tweeted. With Tesla struggling to build its mass market Model 3 model, his announcement was a surprise -- and it sent Tesla shares soaring.

But the enthusiasm quickly faded as investors realized that Mr. Musk hadn't completed the funding to pull off the maneuver. An investigation by the Securities and Exchange Commission ensued as to whether Mr. Musk had misled investors with his tweets.

A settlement with regulators followed. The Tesla CEO paid $20 million, stepped down as chairman and agreed to have his material statements overseen by the company's board.

The government revealed that Mr. Musk rounded up the going-private offering price to the $420 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 2018 when he puffed on a marijuana blunt during a live-video interview.

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, ran into more trouble with the SEC when he made a statement that the regulator considered a violation of the earlier settlement. The two sides settled again this year.

Since going public in 2010, Tesla has been among the most shorted stocks as some investors gamble that the company is overvalued -- drawing barbs from Mr. Musk.

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."

Write to Tim Higgins at [e-mail]

(END) Dow Jones Newswires

December 23, 2019 18:14 ET (23:14 GMT)

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