Tesla declines as Wall Street questions Musk's about-face

What will Tesla's board of directors do about Elon Musk

Musk tweeted August 7 he was considering taking Tesla private and that funding had been secured.

In a blog post Friday, the billionaire entrepreneur declared "most of Tesla's existing shareholders believe we are better of as a public company".

A Tesla spokesman on Sunday also referred back to those previous comments. And if Musk's tweets were to be believed, it was basically a done deal. Due to his desire to remain in absolute control of his company, Musk then backpedaled regarding the private investment scheme. "They will be asking questions of him and others involved in the decision as to why he reversed course".

But acting in good faith may not be enough to help Musk escape the regulator's gaze. Several investors have also sued Tesla, alleging that Musk's announcement was meant to manipulate the price of the company's stock.

Well, turns out that deal was not exactly done, the funding far from secured.

With Musk's idea for a buyout backed by Saudi Arabia's sovereign wealth fund now off the table, attention was zeroing in on Tesla's efforts to become profitable, its cash reserves and what steps Musk could take to raise fresh capital.

Investors in Tesla's bonds and convertible debt also had shown skepticism that the buyout would materialize during the days after that tweet, and a subsequent blog post in which Musk made a case for going private.

In a long report about the Tesla board's deliberations over taking the company private, the Journal revealed that investment advisors from Goldman Sachs and Silver Lake had lined up $30 billion of financing for the privatization deal.

But shareholders said Musk knew Tesla was "woefully unprepared" to meet its production goal of 5,000 Model 3s per week, and that Tesla's share price was inflated until after the company finally cut its production target last November.

Tesla's board published a parallel letter saying they supported Musk in his decision to keep the company public.

"Eventually this will blow over, but it's going to take at least six months", analyst Gene Munster of Loup Ventures said by phone Saturday.

Such discussions are unlikely to be subject to legal privilege and the SEC could subpoena minutes of the meeting, he said.

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