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Baillie Gifford's Anderson questions Musk's Tesla valuation

Baillie Gifford's Anderson questions Musk's Tesla valuation

James Anderson believes Elon Musk has undervalued the worth of his electric car company Tesla. 

The Baillie Gifford fund manager was responding to Musk's sensational tweet yesterday, in which he said he was looking to take the firm private at $420 per share. 

The tweet initially had Wall Street salivating, with shares in Tesla surging by 11% leaving the firm's multitude of short-sellers nursing some $1.3 billion (£1 billion) worth of losses.

However, the shares lost ground in the afternoon session after analysts expressed scepticism over Musk's plan, falling 2.4% over the course of the Wall Street session to close on $370.34. Musk's proposal represents a 13.5% premium to this price, valuing the company at around $72 billion (£56 billion). 

Baillie Gifford is one of the biggest investors in Tesla, owning around $4 billion of its stock. Anderson (pictured) first bought into the firm in 2013 through his £7.9 billion Scottish Mortgage Trust, which now holds 5.7% of its assets in the stock. 

While the excitement around Musk's tweet helped shares in the trust rise 1.4% to 559p in London yesterday, Anderson does not think Musk has put the correct valuation on the stock. 

Speaking to the Times, Anderson said that while he accepted Tesla's prospects were uncertain, its value was much higher than $420 a share, probability-adjusted. 

Anderson, who personally knows Musk, also indicated he needed more clarity on Musk's funding claim, saying 'we'll take our time to talk and think', before making any judgement. 

According to the Wall Street Journal, the Securities and Exchange Commission is examining how much truth was in Musk's tweets and why he opted to use social media rather than a regulatory filing to disclose the intention. 

In a series of communications following the initial tweet, Musk told Tesla shareholders who wanted to stay invested in the firm that they could do so through a private special purpose fund. 

However, Anderson indicated this could be a problem for his trust. 'It’s not clear that most of our clients could own [Tesla] privately, though it would be fine for Scottish Mortgage,' he said.  

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