Tesla said Wednesday its board is evaluating CEO Elon Musk’s idea to take the firm private
Members of Tesla’s board of directors say they’ve met ‘several times’ since last week to discuss Elon Musk’s proposal to take the firm private, as market experts weigh whether the CEO has broken any laws with his shock Twitter announcement.
The billionaire tech mogul tweeted Tuesday that he was ‘considering taking Tesla private’ and that he had secured the necessary funding to do so, providing no further details beyond that.
He proposed taking the loss-making electric car company private at a price of $420 per share, which caused Tesla’s stock to climb to roughly $375 a share on Tuesday. Shares have since come down, with the stock opening more than 1 percent lower on Wednesday morning.
The tweets have raised concerns about whether Musk violated fair-disclosure rules established by the Securities and Exchange Commission around using social media platforms for market manipulation. Investors are also skeptical about how Tesla will fund the take-private transaction.
So far, the SEC has declined to comment on the matter.
At this stage, it’s unclear if any laws have been broken – but, in any case, experts agree that Musk’s surprise announcement on social media is unprecedented, and may have consequences.
‘If a company has always issued its earnings releases in a conventional matter, and it had not alerted investors, then that can be a problem, because an investor who happens to watch the Twitter feed, may have an unfair advantage,’ Ira Matetsky, a partner at Ganfer Shore Leeds & Zauderer in Manhattan told MarketWatch.
Tesla has only told investors to monitor the CEO’s Twitter feed in a public filing once, back in 2013.
After listing a slew of Tesla sites that are frequently updated with the latest information, including its investors’ and press sites, the 2013 document states: ‘for additional information, please follow Elon Musk’s and Tesla’s Twitter accounts.’
Given this advice and Musk’s wide-reaching Twitter presence, with more than 22 million followers, the expert says Musk’s lawyers could argue the new information was readily available, even if his delivery was not traditional.
But, Musk may not be out of hot water just yet.
‘If he doesn’t have financing in place, but the deal happens anyway, then it may be, no harm, no foul,’ Metetsky told MarketWatch.
‘If this was a pipe dream going nowhere, there will be a case.’
In the 24 hours since revealing his plans, Musk has gone quiet on Twitter – an unusual silence for the CEO who is known for his voracious social media activity.

Shares of Tesla shot up more than 11 percent to $379.57 on Tuesday after Musk’s initial announcement, but have since fallen 1.3 percent to $374.60 on Wednesday morning
Musk’s message came after a report said Saudi Arabia’s sovereign wealth fund had bought a $2 billion – or nearly 5 percent – stake in Tesla.
Should Musk ultimately decide to take Tesla private at a price of $420 per share, or more than $70 billion, it would mark the largest buyout in history.
Shares of Tesla shot up more than 11 percent to $379.57 on Tuesday after Musk’s initial announcement, but have since fallen 1.3 percent to $374.60 on Wednesday morning.
In a statement on Tesla’s website on Wednesday, six of Tesla’s nine directors said the board had met several times over the last week to discuss the idea and was ‘taking the appropriate next steps to evaluate this.’
They said the board also addressed the issue of how to fund such a deal, but gave no details.
‘Last week Elon opened a discussion with the board about taking the company private,’ Tesla’s board said in statement issued Wednesday.
‘This included discussion as to how being private could better serve Tesla’s long-term interests, and also addressed the funding for this to occur.
‘The board has met several times over the last week and is now taking the appropriate next steps to evaluate this,’ they added.
The statement from Tesla’s board of directors comes as:
- Elon Musk took shareholders and Wall Street by surprise Tuesday after he posted a series of tweets saying he was weighing taking Tesla private at $420 per share
- Musk said he’d already secured funding, but many remain skeptical about how the firm will find the money for what would mark the largest buyout in history
- Regardless, the news sent shares of Tesla skyrocketing 11 percent on Tuesday, prompting a suspension of trading. By Wednesday, the stock fell 1 percent
- The tweets have raised concerns about the need for an investigation by the SEC, which has so far declined to comment on whether it would launch a probe
Tesla hasn’t disclosed any details about funding beyond noting that the firm had secured the necessary means for a take-private transaction.
So far, no one has stepped forward to say they’re backing the buyout.
In a letter to shareholders after his tweet on Tuesday, Musk fleshed out his idea, suggesting they would get the option to sell their shares for $420 each or remain investors in a private Tesla, out of the glare of Wall Street and its need for quarterly results.
He said that would allow Tesla to ‘operate at its best, free from as much distraction and short-term thinking as possible.’
It’s highly unusual for the head of a major company make a significant announcement in such casual manner.
The tweet prompted questions about how serious Musk’s intentions were.
Some questioned whether Musk violated rules from the Securities and Exchange Commission.
However, there are provisions in SEC rules that allow for certain material announcements to be made on social media platforms.
Experts say Musk’s move could be fuel for a potential investigation later on down the line.
‘If his comments were issued for the purpose of moving the price of the stock, that could be manipulation, it could also be securities fraud,’ former SEC Chairman Harvey Pitt told CNBC.
‘The use of a specific price for a potential going private transaction is highly unprecedented and therefore raises significant questions about what his intent was. So, that would have to be investigated.’


However, several Wall Street analysts expressed skepticism about Musk’s ability to gather the financial backing to complete such a deal.
‘Who gives $30 to $50 billion to buy back the shares?,’ asked NordLB analyst Frank Schwope.
‘And if you stay as a shareholder you get less information than before and you depend more and more on Elon Musk.’
Many cited Tesla’s massive debt load as a sticking point in its plans to go private.
‘The company is cash-flow negative,’ Steven Kaplan, a University of Chicago professor, told BBC.
‘How do you use any debt on a company that is cash-flow negative?’
JPMorgan analyst Ryan Brinkman said he gave only a 50 percent probability that Tesla would go private.
The six board members who issued the statement on Wednesday included James Murdoch, chief executive of Twenty-First Century Fox Inc and Brad Buss, who was the chief financial officer of solar panel maker SolarCity until it was bought by Tesla in 2016.
Other board members mentioned in the statement included Robyn Denholm, Ira Ehrenpreis, Antonio Gracias and Linda Johnson Rice.
Tesla’s other board members are Musk, his brother Kimbal Musk and venture capitalist Steve Jurvetson.