Tesla stock drops closer to pre-Musk tweet level

A sign is seen outside the Tesla Inc. Gigafactory 2 which is also known as RiverBend a joint venture with Panasonic to produce solar panel

After jumping to close at $379.57 on Tuesday, Tesla shares have since fallen about 7.0 percent to end at $352.45 on Thursday, amid investor skepticism over the proposed deal. Tesla shares rose 2.3 per cent to $360.61 in trading Friday before U.S. exchanges opened.

It all began when Musk tweeted about a plan to take electric auto manufacturers Tesla private, signing off his message with the words: "Funding secured".

Directors plan to meet financial advisers next week and are likely to tell chairman Elon Musk to recuse himself while they mull his proposal, CNBC reported Thursday, citing unidentified people familiar with the matter.

"The PIF, which manages more than $250bn in assets, reportedly made an overture to Musk earlier this year, offering to invest money in the company in return for new shares", the Guardian reports.

Mr Musk has said he would be looking to keep his ownership of Tesla at around 20 per cent in a buyout deal, and that a special objective vehicle, like the one that exists at his aerospace company SpaceX, would allow Tesla shareholders to remain invested if they so choose. Musk also said he has secured the funding necessary to do it.

Musk's recent Twitter musings about taking Tesla private may have been an expression of his particular sense of humor. And being public means a lot of people have incentive to attack the company, particularly investors who bet Tesla's stock will decline, a process known as shorting.

As for Tesla shareholders, Musk said in one of his Twitter posts that "investor support is confirmed" for his plan.

Musk's tweets about how Tesla could structure the deal has left $370 billion asset manager Janus Henderson Group Plc perplexed. He even wrote that being a public company, they are ten to wild swings in their stock price and that can prove to be a key destruction for every person working at the Tesla, where all of them are shareholders.

"I'm trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible", he said.

Musk has been under intense pressure this year to turn his money-losing, debt-laden company into a profitable higher-volume manufacturer, a prospect that has sent Tesla's valuation higher than that of GM.

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. He also emphasised on removal of the quarterly system cycle by taking tesla into private company since this quarter cycle could affect tesla's decision making between any of the quarters.



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