Wall Street sees funding hurdle to Musk's plan to take Tesla private

Wall Street sees funding hurdle to Musk's plan to take Tesla private

Wall Street sees funding hurdle to Musk's plan to take Tesla private

But after the markets opened Wednesday morning, Tesla's stock edged downward about 1 percent, to $375. Musk set a price of $420 a share, substantially above the stock's current trading price and Tesla's all-time closing high of $385 a share. 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. This included discussing how being a private company could better serve Tesla's long-term interests. The company declined to comment beyond pointing to an all-employee email sent Tuesday by Musk.

Mr Musk said in his tweet on Tuesday that shareholders would be offered $420 (£326) per share, valuing the business at more than $70bn.

The move to take the company public would remove Musk, who himself has a 20 percent stake, from the public arena - and contentious criticism.

US regulators are examining how Tesla Inc (TSLA.O) Chief Executive Elon Musk announced his plan to take the electric carmaker private and whether his statement was truthful, the Wall Street Journal reported on Wednesday. Musk's money-losing and cash-burning company is an unlikely candidate for debt investors to be willing to help go private.

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.

"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". 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.

Tesla's stock has swung wildly in the past several years, hit by the company's production issues as well as Musk's own explosive remarks on Twitter that have turned off investors.

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

"They're being bombarded with questions that we don't think are as relevant to the long-term value of the company", said Sam Korus, an analyst for ARK Investment Management, which had 443,874 Tesla shares as of June 30.

FILE PHOTO: Elon Musk, founder, CEO and lead designer at SpaceX and co-founder of Tesla, speaks at the International Space Station Research and Development Conference in Washington, U.S., July 19, 2017.

"Just because" Musk wants it at $420 "doesn't mean that there aren't other people who might be willing to come in with another transaction that would be more beneficial to shareholders", Pitt said.

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