Tesla (NASDAQ: TSLA) CEO Elon Musk just gave Wall Street a big surprise: he's considering taking the company private.
One trader sees this as the beginning of a massive rally for the stock.
"Technically speaking, I see a potential bull flag that we had a move about late last year and it's been consolidating," Bill Baruch, president of Blue Line Futures, told the media on Tuesday.
Tesla began last year trading at around $211. A six-month rally sent shares above $386, a level it has struggled to meaningfully break above ever since, though Tuesday's move puts it back within range.
A move to $400 marks a 5% rally from current levels. A level north of $500 represents a 32% premium to Tuesday's price.
Tesla shares surged more than 7% on Tuesday before trading was halted. The rally began when Musk tweeted that he was "considering taking Tesla private at $420" and that he had secured funding.
Reasons for privatizing include not having to disclose information that could give competitors an edge. Moreover, owners of privately-held companies can maintain control over every operational decision without running afoul of shareholders' quarterly expectations.
Musk owns around 20% of Tesla already. He would need to raise more than $50 billion to buy out other shareholders. Adding in around $10 billion in debt, such a deal would represent the largest leveraged buyout in history, surpassing the $45 billion acquisition of the Texas energy giant TXU (Energy Future Holdings) in 2007, which eventually went bankrupt.
TSLA shares got bruised in the early going Wednesday, plummeting $7.72, or 2%, to $371.85
