Elon Musk thinking to take Tesla private

12 August, 2018, 11:59 | Author: Billie Castillo
  • Investor's Corner					Tesla board to formally review Elon Musk’s plan to go private TSLA reacts after hours

Tesla shares tumbled on Thursday (Aug 9) following a report the company faces intensifying scrutiny from securities regulators as U.S. stocks finished a quiet session mostly lower.

Prior to the tweet, shares closed Monday at $341.99.

Then Musk's Tuesday morning tweet that he might take the company private at $420 a share sent them soaring to $379. 57.

Board members will likely tell Musk to recuse himself from the talks, one source told CNBC, while they discuss taking the company private. And Tesla's market value soared by $900 million in a matter of hours.

Tesla disclosed in its most recent quarterly report that it has "received requests for information from regulators and governmental authorities", including the SEC.

Mr Musk has said he would be looking to keep his ownership of Tesla at around 20 per cent in a buyout deal, and that a special goal vehicle, like the one that exists at his aerospace company SpaceX, would allow Tesla shareholders to remain invested if they so choose.

In a statement on Wednesday, Tesla's board said its discussion with Mr Musk "addressed the funding" for the deal, without offering more details. According to the reports, Elon Musk said that according to public firms and companies, share prices vary depending on the demand in the market and the exchange rates. The analysts stated that Tesla's plan to go private continues to remain "unknowable," partly due to the "vague verbiage" used to describe it which means that "the deal is unlikely to succeed in the very near-term, if it succeeds at all".

Just a day after this declaration of trying to flip Tesla into a private company, the banks of Wall Street heated up to figure out the possibility of such a transaction and such a thing can get into a chunk of the action.

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Some Wall Street analysts are skeptical about Musk's ability to garner enormous financial support to complete such an agreement, given Tesla's losses, its United States $ 10.9 billion in debt and its bonds rated in speculative territory by global agencies.

The wild ride for Elon Musk and Tesla shareholders shows no sign of slowing down.

Musk has long battled publicly with short sellers of the stock.

"I do not know how he thinks that's going to work", said Stephen Diamond, who teaches securities law and corporate governance at Santa Clara University's School of Law.

I don't tweet often and, for the life of me, I don't understand why serious people, in the most consequential positions, choose Twitter as their medium to communicate breaking news.

In turn, an internal Tesla market could encourage smaller investors to hold onto their stock, lowering the amount of money, which could be tens of billions, that Musk must raise for the buyout.

In a Wednesday research note, Morgan Stanley analyst Adam Jonas estimated Tesla will end up taking on about $50 billion in additional debt if the company goes private.

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