Doubts grow over Elon Musk’s master plan to take Tesla private

Eileen GuzmanAug 08, 2018

But the biggest motivator for Musk in taking the company private is viewed as the freedom to pursue larger long-term goals instead of short-term financial ones, and this includes his view of Tesla as one of the pieces in a larger puzzle that includes homeowner-controlled energy trading, solar energy accumulation and storage, and autonomous electric trucking. Investors were asking whether he really does have the equity or debt lined up to make it happen.

If Musk's tweet was indeed not a joke, another problem is that it could have been illegal.

They said the board also addressed the issue of how to fund such a deal, but gave no details. However, it certainly looks like his messages on social media have had direct consequences on Elon Musk's personal fortune, and on his company's stock price: Tesla shares started Tuesday trading at about $340 and went as high as $387.

Musk is already CEO of another private company: SpaceX.

If the content of Musk's tweet was not true, lawyers argue, it could expose Tesla's mercurial chief executive officer and the company to regulatory action and private lawsuits.

Tesla's shares were down less than one per cent at $376.31 U.S. in morning trading on Wednesday after closing up 11 per cent at $379.57 USA on Tuesday.

But as the dust settles on Musk's latest Twitter escapade, questions remain over whether the Tesla chief executive broke SEC guidelines by tweeting the news.

"What does Musk mean by 'funding secured?"' asked Toni Sacconaghi, an analyst at Bernstein who has always been bearish on Tesla shares. The company declined to comment beyond pointing to an all-employee email sent Tuesday by Musk. That kind of money may be accessible through sovereign wealth funds or other strategic investors, said Dwight Scott, president of Blackstone Group LP's GSO Capital Partners. MarketWatch reported that information like the fact that the CEO is considering taking a public company private is generally supposed to be announced to investors and the public by way of official earnings reports and press releases.

"It's very hard to put leverage on this company", due to its negative cash flow and "operational issues", Scott said Wednesday on Bloomberg Television.

Musk later tweeted that existing stockholders could choose whether to hold onto their shares or sell them to the new investors for $420 a share.

"We think it would be extremely hard - bordering on impossible - to believe that TSLA could raise significant amounts of debt in public markets", he said.

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