Tesla Shares Rise on Report Board Will Explore Musk's Proposal

Investor's Corner					Tesla board to formally review Elon Musk’s plan to go private TSLA reacts after hours

Investor's Corner Tesla board to formally review Elon Musk’s plan to go private TSLA reacts after hours

On Thursday, Aug. 9, Tesla shares have dropped back to near the level they were trading at before Musk tweeted Tuesday that he may take the company private. Most recently, Muskk had the tech and automotive worlds scratching their collective heads after tweeting that he would consider taking Tesla private should the stock reach $420 a share.

Tesla shares fell to $352.45, down about $4 from where they were before Musk's tweets on Tuesday sent them soaring to a near one-year high.

The Wall Street Journal reported Wednesday that regulators are asking whether Musk's tweet "was truthful".

Tesla said the statement was made by members Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice, and James Murdoch, but Kimbal Musk, Elon's brother, and venture capitalist Steve Jurvetson, who are also on the Board of Directors, were not on the list of the signatory members.

Tesla stock has declined sharply in light of the uncertainty, dropping to $354 midday Thursday.

Mr Musk has said he would be looking to keep his ownership of Tesla at around 20 per cent in a buyout deal, and that a special goal vehicle, like the one that exists at his aerospace company SpaceX, would allow Tesla shareholders to remain invested if they so choose.

Musk tweeted on Tuesday that he had secured funding for the plan, but he has not provided details or evidence, and several securities attorneys told Reuters that Musk could face investor lawsuits if it was proven he did not have secure financing at the time of his tweet.

Some analysts have suggested that Musk could convince Tesla's top shareholders, such as Fidelity Investments and China's Tencent, to roll their equity stakes into the deal, thereby significantly reducing the amount of money needed to be raised. Tesla is and probably always will be a company that will remain underneath the spotlight, so nearly any actions taken by the company itself or Elon Musk as an individual or CEO will have adverse effects on its stock price.

Tesla didn't respond to requests for comment Wednesday.

News of the potential buyout already has stung investors known as "short sellers" who have always been a thorn in Musk's side.

"I do not know how he thinks that's going to work", said Stephen Diamond, who teaches securities law and corporate governance at Santa Clara University's School of Law. And if I learned one thing in my 13 years as a public company CEO, it is that a peer group comparable company analysis is the oxygen that mutual fund managers breathe.

All this buyout talk had predictably dramatic results on Tesla's stock price, with a massive spike just after Musk's tweets went out, followed by a gradual tapering off as people's skepticism started to kick in as to whether South African Tony Stark could actually pull it off. Tesla's stock backtracked by more than 2 percent to close at $370.34. He also emphasised on removal of the quarterly system cycle by taking tesla into private company since this quarter cycle could affect tesla's decision making between any of the quarters.

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