Tesla shares fall as investors await Musk's funding plan

Tesla CEO Elon Musk has offered no evidence to back up a tweet stating he had “funding secured” to take the company private.
David Paul Morris  Bloomberg

Tesla CEO Elon Musk has offered no evidence to back up a tweet stating he had “funding secured” to take the company private. David Paul Morris Bloomberg

He looked no further than his rocket company - Space Exploration Technologies Corp. - for a way to keep Tesla shareholders onboard.

Afterward, stocks were halted for an hour. They can privately sell shares to sophisticated investors such as Fidelity Investments through liquidity events, according to a letter from Musk to employees. Most recently, Muskk had the tech and automotive worlds scratching their collective heads after tweeting that he would consider taking Tesla private should the stock reach $420 a share.

On August 8, 2018, Tesla's board issued a statement (Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice, and James Murdoch), "Last week, Elon opened a discussion with the board about taking the company private". The SEC's requirements say a company must file an official disclosure within four days of a major event. Shares in PIF-owned Saudi Aramco, for one, could see a rise.

The SEC declined to comment on Musk's Tuesday tweet and possible future actions against him or Tesla. The company did not disclose in its filings the details of those requests or its responses.

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Musk has also said he would be looking to keep his ownership of Tesla at around 20 percent, and that a special goal vehicle, like the one that exists at his aerospace company SpaceX, would allow Tesla shareholders to remain invested if they so choose.

According to UK's the Guardian, this new valuation would float his company from its current stock market value of $63.8 billion to a whopping $82 billion, a near $20 billion inflation.

"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.

Whether individuals and some institutional. The question for regulators is whether any of his public statements or the company's run afoul of federal securities laws.

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"I don't really understand the idea of what was suggested in the potential for them to go private", Dick Weil, chief executive officer of $370 billion asset manager Janus Henderson Group, said in an interview with Bloomberg Television.

The company faces a make-or-break moment in its eight-year history as a public company as competition from European automakers is poised to intensify with new electric vehicles from Audi and Jaguar, with more rivals entering the market next year. For the record, Tesla has not been accused of any wrongdoing.

Elon's proposal comes right after Tesla's Q2 earnings report, where within this short period the company lost over $700 million, and he claims that taking the company would help get rid of some of those severe loses.

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