Tesla’s Big Question: Better or Worse Off as Private Company

Tesla and SpaceX CEO Elon Musk at a SpaceX press conference in Cape Canaveral Fla. on Feb. 6 2018. More

The statement, issued by six of Tesla's nine-member board, suggests Musk's controversial tweets, which led to the company's stock being suspended from trading for a time on Tuesday, were less spontaneous than originally believed and not designed simply to punish Tesla stock short-sellers.

"Given the haphazard process of disclosure last afternoon, our initial impression was that Elon Musk sprung his plan of going private upon the public without consulting Tesla's board of directors or major shareholders", Bernstein analysts said in a note titled "Going private?"

Tesla Inc Chief Executive Officer Elon Musk'splan to take the electric vehicle maker private raised doubts among Wall Street analysts about the billionaire' s ability to gather enough financial backing to complete the deal. Investors were asking whether he really does have the equity or debt lined up to make it happen.

Musk's tweets caused a flurry of activity in financial markets.

The statement says Musk "addressed the funding for this to occur" in the conversations.

Mr. Musk on Tuesday proposed taking Tesla private at $420 a share, about 11% higher than the day's closing stock price.

Bloomberg's Selina Wang and Giles Turner reported that Musk and Son failed to reach an agreement over the structure of the company, citing sources.

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The statement was not from the company's full board of directors.

The Tesla board responded to the proposal earlier Wednesday morning, indicating that it is evaluating things.

Musk also said he intends to give Tesla's existing shareholders the option of retaining a stake in the company through a special fund, if they want. "How could Tesla possibly fund such a large transaction?"

Tesla stock opened at $369.09 on Wednesday, sliding almost 3 percent from its Tuesday closing price of $379.57. That kind of money may be accessible through sovereign wealth funds or other strategic investors, said Dwight Scott, president of Blackstone Group LP's GSO Capital Partners. "That sense of the market, investors-so critical for a company like Ford".

"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.

In a letter to shareholders after his tweet on Tuesday, Musk fleshed out his idea, suggesting they would get the option to sell their shares for $420 USA each or remain investors in a private Tesla, out of the glare of Wall Street and its need for quarterly results.

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