Doubts grow over Elon Musk’s master plan to take Tesla private

CEO and lead designer at SpaceX and co-founder of Tesla speaks at the International Space Station Research and Development Conference in Washington

CEO and lead designer at SpaceX and co-founder of Tesla speaks at the International Space Station Research and Development Conference in Washington

According to Musk, taking the company private would remove the scrutiny from analysts that, he says, encourages short-term thinking.

In the last week, Tesla's board has met "several times" to discuss Musk's proposal and "is taking the appropriate next steps to evaluate this".

At a price of $420 per share, the buyout would value Tesla's equity at about $71 billion.

"I suspect the corporate lawyers are scrambling right now and hoping the SEC doesn't go after him and the company, because it could be viewed as a statement from Tesla", Peter Henning, a professor at Wayne State University Law School specializing in securities law, explained to the Detroit Free Press regarding Musk's tweet on Tuesday.

Earlier today, Elon Musk did what he does best and set the internet ablaze - this time, based on a tweet about potentially taking Tesla private again.

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

Former SEC Chairman Harvey Pitt told CNBC on Wednesday that Musk could face criminal and civil penalties if investigators find he did not secure funding prior to the time of his tweet.

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The 55 boxes, draped in the blue and white flag of the United Nations, are each small enough to be carried in one person's arms. The two sides remain technically at war because a peace treaty was never signed.

Tesla shares fell as much as 3.4 per cent to US$366.52 before the start of regular trading, though they pared declines after the board statement. Musk explicitly notes that he does not intend to merge Tesla and SpaceX, and that the two companies will remain separate, even though the private-shareholder structure would be similar.

Investors also seemed to be hesitant of the deal.

Some of the fervor for a Tesla buyout faded Wednesday.

It's unclear if Musk has misled investors, let alone whether he has done so intentionally. Tesla's stock backtracked by more than 2 percent to close at $370.34.

Munster estimates Musk will need $25 billion to $30 billion to buy out all the Tesla shareholders who want to sell at $420. Musk owns about 20 percent of the Palo Alto, California, company's stock, so that likely would reduce the cost of the buyout.

Musk tweeted that he was considering taking the electric vehicle giant private at $420, which implies a 12% premium from where TSLA is trading.

Making money has proven elusive for Tesla while it has been investing in electric auto technology and ramping up production of its vehicles, including a sedan with a starting price of $35,000 to appeal to a broader audience. The stock ended Tuesday just under $380-up a total of 11 percent for the day. As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders.

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