SEC looking into Tesla after Elon Musk's tweets, reports say

SEC looking into Tesla after Elon Musk's tweets, reports say

On Tuesday, Musk revealed on Twitter that he was considering privatizing the company after taking it public in 2010.

The SEC declined to comment on the reports.

They said this "included discussion as to how being private could better serve Tesla's long-term interests".

If Musk didn't actually have financing secured when he said he did. oh boy.

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".

"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.

Tesla stock closed Tuesday at $379.57. The statement did not address how the $420-per-share price was established.


Two of the potential stumbling blocks to Musk's plan include the stock price premium not being enough to get the existing shareholders on board to support the sale and coming up short on the announced funding to complete the transition. Bloomberg News, which first reported on that meeting, said the talks failed to progress due to disagreements over ownership. "Funding secured", the message from Musk, sent out nonchalantly on Tuesday afternoon, stated.

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

The company has only posted a quarterly profit twice in its history and has never made money during an entire calendar year, something that Musk has been trying to change by cutting costs, including recent mass layoffs that trimmed Tesla's workforce by 9 percent.

He said that would allow Tesla to "operate at its best, free from as much distraction and short-term thinking 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.

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

Some on Wall Street shared that view. He goes on to mention the quarterly earnings cycle and how that puts pressure on the company to focus on moves that would boost quarterly numbers while disregarding longer-term motives and outcomes.

There still are near-term execution risks around ramping up Model 3 production and the ability to generate cash, Jonas believes. The transaction would amount to the largest leveraged buyout - in which a company borrows money to repurchase shares and exit the public market - of all time. Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk.

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