Tesla board evaluating CEO's bid to take company private


One of Tesla's biggest shareholders has claimed that the electric vehicle company could be worth far more than the $420 a share that Elon Musk, its founder, said he was prepared to offer in a tweet that rocked Wall Street on Tuesday.

He has not provided details or evidence of the funding by Twitter or in a following blog posted on the Tesla web site, and several securities attorneys told Reuters Musk could face investor lawsuits if it was proven he did not have secure financing at the time of his tweet. However, it certainly looks like his messages on social media have had direct consequences on Elon Musk's personal fortune, and on his company's stock price: Tesla shares started Tuesday trading at about $340 and went as high as $387.

"What does Musk mean by 'funding secured?"' asked Toni Sacconaghi, an analyst at Bernstein who has always been bearish on Tesla shares.

It took Elon Musk only 60 characters to radically change the direction of Tesla. But Musk probably doesn't need that much financing because he owns a roughly 20 per cent stake in the company and he is also creating a special fund that will allow existing shareholders to retain their stakes in Tesla in the private market, if they want. The board said they ended up meeting several times to discuss the issue and are now "taking the appropriate next steps to evaluate" the proposal.

The Times article went on to mention that, if Musk has not in fact fully secured the funding, the assertion of which sent shares up, it would amount to securities fraud.

Just last week, he revealed he had been working 110 hours a week to deliver on short-term promises he had made to Wall Street, a load he traced to his boorish behaviour toward two analysts earlier this year.

Buying Tesla in its entirety would cost US$72b, based on the company's outstanding stock as of July 27.

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Tesla is now valued at $63.8 billion.

It seems to have gotten the better of the billionaire who has tweeted that he's considering taking the company private.

Musk and SoftBank held unsuccessful talks about a take-private deal in April 2017, according to a source familiar with the matter.

Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk.

Musk, his brother Kimbal and director Steve Jurvetson were not included in the statement from members Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice, and James Murdoch. "How could Tesla possibly fund such a large transaction?"

No board member has come forward to back the plan.