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

Will tweeting get this guy in trouble again

The SEC declined to comment on the reports.

Making money has proven elusive for Tesla while it has been investing in electric auto technology and ramping up production of its vehicles, including a sedan with a starting price of $35,000 to appeal to a broader audience.

Scepticism about the legitimacy of Musk's proposed deal surfaced nearly immediately after Musk dropped the bombshell on his Twitter account a few hours after the stock market opened on Tuesday.

The stock fell more than 2% and closed at $370.34.

At a price of $420 per share, the buyout would value Tesla's equity at about $71 billion.

The murkiness of the financing could turn into a legal mine field for Musk and Tesla, according to both Coffee and former SEC lawyer Pete Henning, now a law professor at Wayne State University. In a short statement, several Tesla board of members said Musk talked about taking the company private last week and "addressed the funding for this to occur".

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'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. However, Musk expects the shareholders to agree with him and allow him to take the company private again. If the statement regarding having secured the funding for the move later proves unachievable, then Musk could be in hot water with regulators over the statements that he first made on Twitter.

Musk has promised a sustained net profit starting in the third quarter.

Just last week, he revealed he had been working 110 hours a week to deliver on short-term promises he had made to Wall Street, a load he traced to his boorish behaviour toward two analysts earlier this year.

The billionaire has at least been clear about his resentment of life on the public market. He suggested he did in an initial tweet, but so far Tesla hasn't disclosed any sources of financing, and no one has stepped forward publicly to say they're backing the plan. That report had already partly lifted Tesla's stock.

If the company went private, employees and shareholders would be given an opportunity to sell or buy their stock approximately every six months. Alternatively, stockholders can hold on to their shares, which would become privately-traded. The board said they ended up meeting several times to discuss the issue and are now "taking the appropriate next steps to evaluate" the proposal.

Net net, Rusch reiterates an Outperform rating on Tesla shares, with a price target of $385, which represents a slight upside potential from current levels.

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