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

Tesla said on Wednesday the discussions had addressed the issue of how to fund such a deal, but gave no details.

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Shares rocketed up 11 percent after Musk's grand reveal Tuesday, with some expecting they would hit $420 - the price Musk had promised shareholders would receive once the company had finalized its go-private transformation.

Some Wall Street analysts were skeptical of Musk's ability to gather the huge financial backing to complete such a deal, given that Tesla loses money, has $10.9 billion of debt and its bonds are rated junk by credit ratings agencies. The move would also have little effect on Musk's current stake in the company, which rests at about 20 percent in current publicly traded form.

"Finally, this has nothing to do with accumulating control for myself".

"Basically, I'm trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible".

Musk hasn't been quiet about his disdain for short sellers.

In subsequent tweets, Mr. Musk said that going private would end "negative propaganda" from short sellers.

The oil-rich kingdom of Saudi Arabia's investment fund has gobbled up a multibillion-dollar stake in the company in recent months, the Financial Times reported Tuesday, but Tesla has not answered questions about the involvement of the kingdom, or anyone else, in how he would finance the company's exit from public markets.

"I do not believe this is the appropriate way to suggest going private", Charles Elson, director of the John L Weinberg Center for Corporate Governance at the University of DE, told CNBC. The move would also foreclose the option of selling more stock to raise cash every year, a move which Musk has disfavored in recent years.

Tesla Inc said on Wednesday its board is evaluating chief executive Elon Musk's idea of taking the company private after he brought the matter up for discussion last week. "Either way, the future is very bright, and we'll keep fighting to achieve our mission".

In the last week, Tesla's board has met "several times" to discuss Musk's proposal and "is taking the appropriate next steps to evaluate this".