Controversial tweet by Tesla Inc. TSLA CEO Elon Musk It is currently the subject of a lawsuit. The tweet could also have been the starting point for potential take-private deals and investors with the belief that the stock was undervalued at its current levels at the time.
What happened: In 2018, Musk tweeted that he had secured funding to take Tesla private for $420. The price was about a 20% premium to the price at which Tesla shares were previously trading.
A trial is underway to determine if Musk actually secured the money or was just trying to boost Tesla’s stock price.
Musk testifies public investment fundThe Saudi Sovereign Wealth Fund was part of the funding to take Tesla private.
Tesla CEO testifies Alphabet Inc. googGoogle There was an ongoing interest in acquiring Tesla at the time, and Alphabet’s interest in acquiring Tesla influenced his decision to set aside funds to take Tesla private.
Tesla ultimately did not go private and remained a public company. Let’s take a look at how stock prices have progressed since Musk’s famous tweet.
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Invest $1,000 in Tesla stock: Tesla shares soared after Musk’s tweet. After opening at $343.80, the stock hit his high of $387.45 on the August 7, 2018 trading day.
A $1,000 investment in Tesla at that day’s high could have bought 2.58 shares of TSLA.
Tesla conducted a 1-for-5 stock split in 2020 and a 1-for-3 stock split in 2022. The split would have turned 2.58 shares into his 38.7 shares.
A $1,000 investment in Tesla at the time of Musk’s tweet is worth $6,156.40 today, based on Tesla’s price of $159.08 at the time of writing.
This represents a return of 515.6% from the time of the tweet. A hypothetical investment would have generated an average annual return of 114.6% over the past four and a half years.
Tesla didn’t go private, but investors who stuck or bought at the time of the tweet were happily rewarded with market-beating returns.
The same $1,000 investment at the intraday high on 07/08/2018 would cash out at $1,083.60, or a profit of 8.4%, if the Take Private trade closed at $420.
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