Thursday, 16 August, 2018

Tesla shares fall 5% on Wall St. skepticism, SEC probe reports

Investor's Corner					Tesla board to formally review Elon Musk’s plan to go private TSLA reacts after hours Investor's Corner Tesla board to formally review Elon Musk’s plan to go private TSLA reacts after hours
Ginger Lawrence | 12 August, 2018, 00:37

Tesla, which hasn't been accused of wrongdoing, declined to comment.

Musk launched a campaign to turn Tesla private on one day, which included various provocative tweets, a suspension of trading in the shares of the company, reporting about an important Saudi investment, a flow in the stock price.

The six members said the Board has "met several times over the last week and is taking the appropriate next steps to evaluate this".

Shares of Tesla have rolled over and given up their more than 10% gains from Tuesday when CEO Elon Musk tweeted that he was considering taking the company private at $420 share. The statement did not address how the US$420-per-share price was established.

But if the buyout flops, Musk and Tesla will likely face class-action lawsuits from shareholders alleging they were duped, and potential legal trouble from the Securities and Exchange Commission, too.

Tesla shares fell 2.4 per cent to US$370.34 on Wednesday after closing up 11 per cent on Tuesday.

"Who gives U.S. $30 to $50 billion to repurchase the shares?"

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

The deal would be the biggest leveraged buyout of all time, beating the $45 billion record set by Texas power utility Energy Future Holdings.

Investors - along with the SEC - are raising concerns about CEO Musk's proposal to take Tesla private.

SoftBank is now not interested in a deal for Tesla after earlier this year taking a stake in General Motors Co's self-driving unit, Cruise, Reuters reported earlier on Wednesday. This deal to take Tesla into a private could lead to a rave of fees for the Wall Street.

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Musk's personal stake in Tesla is nearly 20 percent, meaning he would need roughly $70 billion to take it out of the market.

The increasingly public feud between Musk and short-sellers of Tesla stock provided the motivation for Musk to go public.

"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", he wrote in a blog post following his tweet.

Some on Wall Street shared that view. While Tesla undoubtedly has excellent executives and a cadre of top professional talent, it seems to me that these funders are making an extraordinarily large bet on one man and his ability to achieve his vision.

Mr Musk said in a tweet on Tuesday that he had secured financing for the deal, but he did not publicly provide further details.

Tesla is up almost 13% this year.

Speculation has been swirling around Tesla and Musk's disclosures amid the yearlong struggle the company had ramping up production of the Model 3 sedan, the first vehicle that the company has attempted to mass manufacture.

No major banks or investors have come forward to say that they have been contacted to help fund the take-private move - which, at about $70 billion, would be the largest LBO ever.

Some observers have questioned whether Musk's original tweet was meant to punish the short-sellers who've been the bane of his existence.

There are plenty of other reasons to doubt Musk's plan.