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

Flags fly over the Tesla Inc. Gigafactory 2 which is also known as RiverBend a joint venture with Panasonic to produce solar panels and roof tiles in Buffalo New York

Flags fly over the Tesla Inc. Gigafactory 2 which is also known as RiverBend a joint venture with Panasonic to produce solar panels and roof tiles in Buffalo New York

U.S. regulators are examining how Tesla chief executive Elon Musk announced his plan to take the electric carmaker private and whether his statement was truthful, the Wall Street Journal reported. In his first tweet he said funding was secured but provided no details.

Six of nine members said in a prepared statement Wednesday that Musk began talking with the board about the move last week.

Tesla CEO Elon Musk tweeted Tuesday that he's is mulling taking Tesla private at US$420 a share.

The eccentric Musk announced the bombshell move Tuesday on Twitter, writing that he had secured funding to buy Tesla Inc.'s shares at $420 each.

A cycle that continues to repeat itself - the rich get richer today as Elon Musk has reportedly added $1.4 billion to his net worth with a single tweet, according to Business Insider.

As far as SEC rules go, using social media for public company announcements is fine if investors are alerted prior to the announcement. Many initially thought it was Elon Musk's attempt at a bad joke about marijuana, because "420" has always been associated with pot.

There is no evidence this was Musk's intention with his remarks on Tuesday. The value of his shares at that price would total $72 billion, short of the $100 billion performance bar it must cross for him to be able to exercise his $2.6 billion stock-option grant, Bloomberg noted. This included discussing how being a private company could better serve Tesla's long-term interests.

The deal would be the biggest leveraged buyout of all time, beating the $45 billion record set by Texas power utility Energy Future Holdings. That report had already partly lifted Tesla's stock.

The company is still working its way out of what Musk called "production hell" at its home factory in Fremont, California, where a series of manufacturing challenges delayed the ramp-up of production of its new Model 3 sedan, on which the company's profitability rests.

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

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. "How could Tesla possibly fund such a large transaction?"

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.

Musk, his brother Kimbal and director Steve Jurvetson were not included in the statement from members Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice, and James Murdoch.

No board member has come forward to back the plan.

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