As Tesla's board of directors rallied Wednesday behind chief Elon Musk's extraordinary push to take the all-electric automaker private, a growing contingent of investors, analysts and former regulators voiced their doubts that the deal would ever take off.
Musk took Tesla shareholders and the stock market by surprise on Tuesday by announcing on Twitter he was considering taking the loss-making electric car-maker private at $420 United States a share.
"What does Musk mean by 'funding secured?"' asked Toni Sacconaghi, an analyst at Bernstein who has always been bearish on Tesla shares.
The US Securities and Exchange Commission has made inquiries into Tesla in the wake of Musk's tweets, The Wall Street Journal reports. On the basis of both the total dollar amount, and the fact that Tesla has yet to turn a profit, the deal would be "unprecedented" in the annals of public companies going private, Barron's notes. "And if you stay as a shareholder you get less information than before and you depend more and more on Elon Musk". The board, they said, had met "several times" over the last week and was actively working to "evaluate" the proposal. The company declined to comment beyond pointing to an all-employee email sent Tuesday by Musk. In short, Musk believes going private can place the focus back on long-term planning, which is now viewed through the lens of how it will affect short-term quarterly finances.
Buying Tesla in its entirety would cost US$72b, based on the company's outstanding stock as of July 27.
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It seems to have gotten the better of the billionaire who has tweeted that he's considering taking the company private. The value of his shares at that price would total $72 billion, short of the $100 billion performance bar it must cross for him to be able to exercise his $2.6 billion stock-option grant, Bloomberg noted.
Those who believe Musk is carrying out a vendetta against short sellers may point to a May 4 tweet suggesting he might have something up his sleeve.
Musk and SoftBank held unsuccessful talks about a take-private deal in April 2017, according to a source familiar with the matter.
Despite the board's statement, it was clear early Wednesday that the euphoria had worn off over Musk's bold claim that he had the funding secured to take the electric-car maker private.
Investors have also questioned why the maneuver was not listed in a 69-page SEC filing, submitted last week and released Monday, that provided intricate detail of Tesla's financial outlook and coming events. Tesla's other board members are Musk, his brother Kimbal Musk and venture capitalist Steve Jurvetson.