Tesla take-private skepticism grows after Elon Musk's funding claim

08 August, 2018, 22:46 | Author: Kevin Carter
  • CEO and lead designer at SpaceX and co-founder of Tesla speaks at the International Space Station Research and Development Conference in Washington

Elon Musk has faced a barrage of criticism recently and his electric auto company Tesla has been taking a pounding from critics.

Tesla's stock has swung wildly in the past several years, hit by the company's production issues as well as Musk's own explosive remarks on Twitter that have turned off investors.

The board on Wednesday. "That sense of the market, investors-so critical for a company like Ford".

'Am considering taking Tesla private at $420, ' Musk tweeted, referring to the value of the share price he would have to pay.

The brief statement by six of the nine board directors said that the discussions about taking the company private had also "addressed the funding for this to occur".

In that time, Tesla short-sellers - Musk's sworn enemies - may have lost more than $800m, according to estimates from financial-technology firm S3 Partners, while his 20% stake reportedly gained $851m.

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"What does Musk mean by 'funding secured?"' asked Toni Sacconaghi, an analyst at Bernstein who has always been bearish on Tesla shares.

Two of the potential stumbling blocks to Musk's plan include the stock price premium not being enough to get the existing shareholders on board to support the sale and coming up short on the announced funding to complete the transition. There are no active talks between the companies now, said the people, who asked not to be identified discussing private deliberations. Korus said he would need more details from Musk to judge whether a buyout offer would be practical and at what price it would be attractive.

'Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term, ' Musk wrote in a letter to employees. Of course, going private probably won't require anywhere near that much money, based on how Musk wants it all to go down.

The six board members who issued the statement on Wednesday included James Murdoch, chief executive of Twenty-First Century Fox Inc. and Brad Buss, who was the chief financial officer of solar panel maker SolarCity until it was bought by Tesla in 2016.

Former SEC chair Harvey Pitt told CNBC that while the U.S. stock market regulator permits executives of publicly listed companies to use social media to make statements about their businesses, Musk's tweet was still "highly unprecedented".

Other board members mentioned in the statement included Robyn Denholm, Ira Ehrenpreis, Antonio Gracias and Linda Johnson Rice.

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