Tesla Share Price Stumbles After Elon Musk Abandons Go-Private Plan

Tesla Share Price Stumbles After Elon Musk Abandons Go-Private Plan

Tesla Share Price Stumbles After Elon Musk Abandons Go-Private Plan

Tesla shares were down roughly 2 percent in early trading Monday, after chief executive Elon Musk bowed to apparent pressure from stockholders to keep the electric vehicle maker a public company. Some analysts said the drama has damaged the credibility of both Musk and his board, and called for the company to bring in a top operations executive to help right the ship.

Tesla's shares, already down almost 10 percent from their level on August 7, just before Musk tweeted that he had "funding secured" for a buyout at $420 a share, fell 5 percent in trading in Germany to $263.50.

For the company's investors, Tesla's CEO Elon Musk is a visionary whose electric vehicle is giving us a glimpse into the future that successfully integrates clean energy with transport and home power.

The trading on Monday will be a test of how investors are taking the demise of the buyout plan, and their views on whether Musk, who owns about a fifth of Tesla, can avoid going back to capital markets to raise more cash.

In his original tweet, Musk said he had "funding secured", and later revealed that statement was based on talks he held with the Saudi Arabian sovereign wealth fund about investing in Tesla.

A Tesla spokesman on Sunday referred to those previous comments.

Musk also indicated he was unaware how challenging the process would be and did not want to distract from the goal of ramping up production of the Model 3 sedan.

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In the end, Musk withdrew the plan to go private after advisers told him the new investments would come with conditions along with other considerations, the report says.

She also raised concerns about a second comment Musk made on Friday, where he said it had become apparent that compliance restrictions would prevent many of Tesla's institutional shareholders from holding private Tesla equity.

Analysts have suggested a capital raise may be required soon to boost investor confidence.

This week would also be an inopportune time for a capital raising, given that many bankers and investors are away ahead of the September 3 Labor Day holiday.

"We see the company raising $2 billion in 4Q18, through convertible debt, which may prove a challenge if there still is an ongoing SEC case open", Cowen and Co analyst Jeffrey Osborne wrote in a client note.

Tesla earlier this year announced plans to build a battery and vehicle assembly complex in China.

Musk said on Friday he believed there was plenty of potential funding to take the company private, but he did not provide any further details to bolster his "funding secured" assertion.

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