It was the tweet heard around the U.S. capital markets last week when Tesla co-founder and CEO Elon Musk announced he was mulling the idea of taking the Palo Alto, California-based company private.
Apparently, it was also the tweet heard around the world as Saudi Arabia’s Public Investment Fund is purportedly one of the suitors vying to get a piece of Tesla, which could be beneficial for one particular ETF–the iShares MSCI Saudi Arabia ETF (NYSEArca: KSA).
Musk used Tesla’s company blog as a sounding board for this latest development, citing that Saudi Arabia approached him on more than one occasion.
“Going back almost two years, the Saudi Arabian sovereign wealth fund has approached me multiple times about taking Tesla private,” Musk said in the blog post. “Recently, after the Saudi fund bought almost 5 percent of Tesla stock through the public markets, they reached out to ask for another meeting. That meeting took place on July 31st. … I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed.
Hence, Musk’s two words of “funding secured” in the tweet was not as cryptic as Wall Street analysts thought with many positing exactly where this source or sources of funds would originate or if there was even any actual capital secured that will allow Musk’s privatization play to come to fruition. With a price of $420 per share as referenced in last week’s tweet, it would effectively bring Tesla’s market value to $71 billion.
Related: Elon Musk: Tesla Going Private is ‘Best Path Forward’
In the meantime, KSA could be in play if ongoing talks with the Saudis and Musk allow the wealth fund to acquire an even larger stake in Tesla than originally anticipated. KSA has been having a tremendous year, gaining 20.94% year-to-date based on Yahoo! Finance performance numbers.
Looking at the YTD chart, KSA has crossed below its 50-day moving average, which could allow the ETF to gain should talks with Tesla progress and a deal solidifies that gives the Saudi Arabia investment fund a sizeable stake in the automaker. Nonetheless, KSA is still outperforming its more general emerging markets ETF peer, iShares MSCI Emerging Markets ETF (NYSEArca: EEM), by a wide margin.
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