Economy

Musk says investors convinced him Tesla should stay public

Musk says investors convinced him Tesla should stay public”

Musk met the electric auto and solar panel company's board on Thursday to tell them he was keeping the company public and the board agreed, according to the statement. At least two lawsuits seeking class-action status also have been filed alleging Musk broke securities laws by making it sound like financing for the buyout was lined up.

Musk said his main motivation for keeping Tesla public was entreaties from shareholders. And after you read that, watch out, Tesla reporters are going to be spinning this every way by Sunday this weekend.

Musk surprised markets on August 7 by announcing on Twitter he wanted to take Tesla private at US$420 a share.

Musk has said that Tesla will become profitable starting in the third quarter of this year and will not need to raise additional funds, despite its increased cash-burn rate in recent quarters.

Six board members said in a statement Friday night that the board supports Musk and Tesla.

In a separate statement, the board confirmed the decision and announced its intention to dissolve a committee of independent directors formed to review Musk's proposal.

"They have someone in charge who has raised serious doubts in the financial and public community about his ability to take the company forward".

In explaining one of his reasons to take Tesla private, Musk cited short sellers earlier this month, stating that "being public means that there are large numbers of people who have the incentive to attack the company".

In the statement, Musk said he worked with investment firms Goldman Sachs, Morgan Stanley and Silver Lake to consider all the options, and he talked to investors.

"Personally, I'm going to look to see how the stock opens on Monday". During that time, Musk also seemed hash out most of the details on social media.

Jim Chanos of Kynikos Associates, which has been shorting Tesla, said on Saturday: "The corporate governance disaster that is Tesla continues". "Elon communicated to the Board that after having done this work and considered all factors, he believes the better path is to no longer pursue a transaction for taking Tesla private", they wrote. Members of Tesla's board of directors share that sentiment.

"The fact that he's now backing off so quickly, within a matter of weeks, indicates the insincerity in which the first statement was made", Cox said.

On top of all this drama, last week Musk disclosed in an interview with the New York Times that he was stressed out from trying to meet long-delayed production targets for the Model 3 mass-market electric auto.

At points, there was even talk about Musk's state-of-mind, as the CEO has been under mounting pressure while his company struggles to produce large quantities of its first mass-market vehicle, the Model 3 sedan.



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