Earlier this month, Elon Musk dropped a bombshell when he announced on Twitter plans to turn Tesla into a private company at $420 a share. The news didn't go down well, resulting in Tesla's share price soaring and an investigation launched by the Securities and Exchange Commission. After the overwhelmingly negative reaction, the CEO has had a change of heart following discussions with shareholders on the best path to take.
Writing in a blog post, Musk confirmed that Tesla will remain a public company. "Given the feedback I've received, it's apparent that most of Tesla's existing shareholders believe we are better off as a public company," he wrote. "Additionally, a number of institutional shareholders have explained that they have internal compliance issues that limit how much they can invest in a private company."
"There is also no proven path for most retail investors to own shares if we were private. Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was 'please don't do this'."
Musk added that taking Tesla private would have presented more challenges than initially expected and hindered the company's aim of ramping up Model 3 production after making progress and making the company more profitable. Tesla's Board of Directors agreed with Musk's decision to keep the company public.
Incidentally, Musk admitted during an interview with The New York Times that he posted the Tweet about wanting to make Tesla Private without it being reviewed by the board, which has prompted widespread criticism. Former GM executive Bob Lutz also recently questioned Musk's ability to run the company and called for him to step down as Tesla's CEO.