The Internet and financial industry weren't the only ones to take notice Tuesday when Tesla CEO [NYSE: TSLA] Elon Musk took to Twitter floating the idea of taking the automaker private. In his first tweet he said funding was secured but provided no details.
It wasn't until Wednesday when six directors on Tesla's nine-member board publicly acknowledged that Musk approached them last week about pursuing the financing for a buyout that would take the company off the stock market.
Mr. Musk on Tuesday proposed taking Tesla private at $420 a share, about 11% higher than the day's closing stock price.
'Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term, ' Musk wrote in a letter to employees.
Public companies have four days https://www.sec.gov/fast-answers/answersform8khtm.html to report certain material events that shareholders should know about to the U.S. Securities and Exchange Commission. "And if you stay as a shareholder you get less information than before and you depend more and more on Elon Musk". "The board has met several times over the last week and is taking the appropriate next steps to evaluate this".
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.
Some on Wall Street shared that view. Musk's money-losing and cash-burning company is an unlikely candidate for debt investors to be willing to help go private.
They said this "included discussion as to how being private could better serve Tesla's long-term interests". Tesla also would likely need to borrow billions more to help pay for its ambitious plans of its electric vehicle line and its battery manufacturing plants. Tesla was trading around $300 per share in April 2017 when the talks reportedly fell through.
Those who believe Musk is carrying out a vendetta against short sellers may point to a May 4 tweet suggesting he might have something up his sleeve.
Despite the board's statement, it was clear early Wednesday that the euphoria had worn off over Musk's bold claim that he had the funding secured to take the electric-car maker private.
He's also Tesla's largest shareholder.
No board member has come forward to back the plan.