Tesla Stock Tumbles Hard as Questions Mount About Proposal to Go Private

Tesla board to meet to discuss taking company private: report | TheHill

Tesla board to meet to discuss taking company private: report | TheHill

David Whiston, an equity strategist at Morningstar who covers the USA auto industry, said he was confused by Musk's tweets, which he said indicated Musk had both the funding and the shareholder votes necessary to take the company private.

The slide has largely wiped out losses for short-sellers since Mr Musk, 47, Tesla's founder and chief executive, tweeted on Tuesday he had "funding secured" to buy it for $420 a share.

While Tesla's board has held multiple discussions about Mr Musk's proposal, which first became public on Tuesday, it has not yet received specific information on who will provide the funding, one of the sources said.

Trading on Tesla's stock was stopped Tuesday following Musk's tweets, which sent shareholders and reporters into a scramble.

Tesla shares fell 1.5% to U.S. $ 374 in Wednesday's trading after closing 11% higher on Tuesday.

The reference to the company's stock is particularly relevant because Tesla shares immediately skyrocketed in the wake of Musk's tweet.

"Who gives $30 to $50 billion to buy back the shares?" asked NordLB analyst Frank Schwope.

Over the past few weeks and months, Tesla and more specifically CEO of Tesla Elon Musk have been in the news quite a fair bit, and a good amount of that press hasn't been exactly positive.

The deal would be the biggest leveraged buyout of all time, beating the $45 billion record set by Texas power utility Energy Future Holdings.

I hope not, because I think Tesla going private is a great idea (like my friend Yann Brandt, who thankfully has announced in the wake of Musk's Twitter pronouncement that he is keeping his seminal solar newsletter, SolarWakeup, private). The current value of Tesla's shares stands at around $370 so a buyout at $420 would represent a roughly 20% premium at buyout, a defiantly tempting offer to get shareholders to sell their shares.

"I wish we could be private with Tesla", Musk said in an interview with Rolling Stone published in November. The talks failed to progress due to disagreements over ownership and have not started up again.

He said that would allow Tesla to "operate at its best, free from as much distraction and short-term thinking as possible".

It's unclear whether Saudi Arabia's sovereign wealth fund, which is said to have built less than a 5 per cent stake in Tesla, has agreed to commit money to the transaction, CNBC said.

The company is still working its way out of what Musk called "production hell" at its home factory in Fremont, California, where a series of manufacturing challenges delayed the ramp-up of production of its new Model 3 sedan, on which the company's profitability rests.

Before things came tumbling back, Tesla reached a market cap of almost $65 billion, or almost 20% more than General Motors. Musk's bold claim that Tesla already has the funding in place to delist itself from the public glare of the stock exchange has yet to be verified.

Board members will likely tell Musk to recuse himself from the talks, one source told CNBC, while they discuss taking the company private.

It took about two hours before Tesla posted a Musk email to company employees on its website elaborating on his reasons for wanting to do the deal, making it clear he was serious.

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