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

Aug 09, 2018, 01:18
Tesla take-private skepticism grows after Elon Musk's funding claim

Board members at Tesla are evaluating CEO and Chairman Elon Musk's $72 billion proposal to take the electric vehicle and solar panel maker private.

'Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term, ' Musk wrote in a letter to employees. The company already has a $2 billion investment from Saudi Arabia's sovereign fund as well as Tencent, which took a 5 percent stake in 2017. However, Musk expects the shareholders to agree with him and allow him to take the company private again.

Mr. Musk on Tuesday proposed taking Tesla private at $420 a share, about 11% higher than the day's closing stock price. The company declined to comment beyond pointing to an all-employee email sent Tuesday by Musk.

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It killed two people, including a firefighter, and destroyed more than 1,000 buildings before being fully contained on January 12. Several thousand people have been evacuated , although some have been given permission in recent days to return to their homes.

Teresa Goody, a former SEC official, said Musk "did something inappropriate and caused chaos in the market" in a way that would likely draw scrutiny from investigators.

By taking Tesla private, Musk believes that the company will be able to sharpen its long-term focus of revolutionizing an automobile industry dominated by fuel-combustion vehicles without having to cater to investors' fixation on how the business is faring from one quarter to the next. The final cost of the deal will be influenced heavily by whether they and other large stockholders can and will retain shares in the newly-private Tesla, rather than insisting on a cash buyout.

Former SEC chair Harvey Pitt told CNBC that while the USA stock market regulator permits executives of publicly listed companies to use social media to make statements about their businesses, Musk's tweet was still "highly unprecedented". 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. But I didn't walk away from it thinking, .

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Protesters interrupted a news conference that Freeman held this morning announcing the decision, according to ABC affiliate KSTP . Blevins springs from the curb and starts running, dropping the dog's leash and almost knocking over a woman with a stroller.

Tesla's CEO also laid out what he envisions as the ideal path for going private.

"This proposal to go private would ultimately be finalized through a vote of our shareholders", Musk said in explaining the potential move.

The Tesla board responded to the proposal earlier Wednesday morning, indicating that it is evaluating things. And you'd think an entity putting up that kind of money would insist that Musk announce the move in a more conventional way to avoid unnecessary legal trouble. "Funding secured", Musk tweeted Tuesday afternoon, initially offering little context.

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There are not many players around with the necessary breadth of attributes for the role. Klopp praised Mane's performance after coming on in the second half.

The SEC is also reportedly looking into whether Elon's use of Twitter constituted sufficient disclosure.

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