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Tesla CEO Elon Musk’s discussion of privatizing the company’s shares sparked a seesaw in prices before trading was suspended. (Tesla via YouTube)

Tesla’s stock shot up sharply today after the company’s billionaire CEO, Elon Musk, tweeted that he was considering taking Tesla private at a price of $420 a share.

“Funding secured,” he wrote.

When the tweet-sized bombshell hit, Tesla’s stock was already trading higher thanks to reports that a Saudi investment firm had amassed a 3 to 5 percent stake in Tesla. Prices seesawed in the range of $360 to $370, representing a roughly 7 to 8 percent rise, while investors tried to decide whether Musk was joking.

It didn’t help that some interpreted $420 as a veiled reference to 4-20, which is a magic number for marijuana users. At $420 a share, Tesla’s valuation would be in the range of $72 billion.

When NASDAQ trading was stopped, Tesla’s shares were at $366.94, a 7.3 percent gain. When trading resumed, prices reached beyond $380 but ended the trading day just below that mark, adding up to a rise of nearly 11 percent over the previous day’s close. The gap between $380 and $420 reflects market uncertainty over whether the deal will go through as described.

In a follow-up blog post about the privatization plan, Musk said “a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best.”

He promised that Tesla shareholders would be able to keep their shares if desired, and that Tesla employees could continue to sell shares and exercise options. Shares could be bought or sold periodically on a private marketplace, Musk said.

Tesla has had more than its share of ups and downs over the past few months, due to an intense focus on production rates and sales figures for Tesla’s mass-market Model 3 electric car. During last week’s quarterly recap, Musk raised the prospect of a turnaround from consistent losses to consistent profits in the current quarter, giving share prices a boost.

Musk has occasionally griped about the frustrations of running a public company: Last year he called Tesla a “drama magnet” — and he has vowed not to do an initial public offering for his other major venture, SpaceX, until after regular trips to Mars begin, if ever.

In his blog post, Musk emphasized that the intention was not to merge SpaceX and Tesla, a strategy that some have speculated about in the past. “They would continue to have separate ownership and governance structures,” Musk wrote. “However, the structure envisioned for Tesla is similar in many ways to the SpaceX structure: External shareholders and employee shareholders have an opportunity to sell or buy approximately every six months.”

Going private would reduce the market pressure on Tesla, especially from short sellers who believe Tesla is set up to fail and are pursuing strategies to profit from Tesla’s troubles. On the other hand, many of Tesla’s most passionate backers bought stock because they believe the price will eventually go to stratospheric levels. Such backers begged Musk on Twitter to be allowed to keep their shares, and Musk assured them that they could.

In his tweets, Musk said he would keep his Tesla shares no matter what happens, and noted that he currently doesn’t hold a controlling interest in the company. (Musk said in his Tesla blog post that he held a 20 percent stake.) He said that if the plan goes forward, shareholders would cast the deciding vote.

“If the process ends the way I expect it will, a private Tesla would ultimately be an enormous opportunity for all of us,” Musk said. “Either way, the future is very bright and we’ll keep fighting to achieve our mission.”

Here’s how Musk laid out his thinking in a Twitter conversation with followers:

To announce a privatization plan in a series of tweets is unusual, to say the least. It’s not hard to imagine the gyrations that Tesla’s stock would go through if Musk’s plan was scrapped or substantially changed. Depending on the follow-through, or lack thereof, Musk’s statements could cause problems with the Securities and Exchange Commission.

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