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

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

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

It wasn't until Wednesday when six directors on Tesla's nine-member board publicly acknowledged that Musk approached them last week about pursuing the financing for a buyout that would take the company off the stock market.

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.

It took Elon Musk only 60 characters to radically change the direction of Tesla. Musk's money-losing and cash-burning company is an unlikely candidate for debt investors to be willing to help go private. "I wanted to let you know my rationale for this, and why I think this is the best path forward", Musk wrote in a blog post.

Neither Musk nor the board have said where the "secured" funding would come from. About a quarter of Tesla shares are on loan to traders who will profit if the share price falls. He goes on to mention the quarterly earnings cycle and how that puts pressure on the company to focus on moves that would boost quarterly numbers while disregarding longer-term motives and outcomes.

Trading on the company's stock was halted Tuesday after Musk tweeted that he was considering taking Tesla private. Musk owns about 20 percent of the Palo Alto, California, company's stock, so that likely would reduce the cost of the buyout.

There is no evidence this was Musk's intention with his remarks on Tuesday. The Tesla CEO claimed at the time that he had already secured funding for the move. The fund then reportedly proceeded to buy large amounts of Tesla stock on secondary markets, according to the Financial Times, and is now one of Tesla's eight biggest shareholders. But going private could also complicate Tesla's effort to build a mainstream electric vehicle by removing the easy access to capital the Wall Street darling has enjoyed.

The Internet and financial industry weren't the only ones to take notice Tuesday when Tesla CEO [NYSE: TSLA] Elon Musk took to Twitter floating the idea of taking the automaker private.

I drove the regular, 271-hp, rear-wheel-drive Tesla Model 3 a few months ago and liked it.

Musk also said he intends to give Tesla's existing shareholders the option of retaining a stake in the company through a special fund if they want to stay invested.

The Tesla board responded to the proposal earlier Wednesday morning, indicating that it is evaluating things. Many initially thought it was Elon Musk's attempt at a bad joke about marijuana, because "420" has always been associated with pot.

Any buy-out would require a shareholder vote.

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