Tesla falls, wiping out a tweet-fueled rally in just two short days
It didn’t take long for the euphoria to fade.
Two days after Elon Musk triggered a frantic rally with a tweet saying he was considering taking Tesla private, the stock erased most of those gains.
Doubts have mounted about Musk’s ability to take the electric car maker off the market, sending the stock tumbling. Before the tweet, shares closed Monday at $341.99. After two days of turmoil, they stood at $352.45, well off the $420 at which Musk said shareholders would be bought out. The shares have slid on back-to-back days after having jumped 11 percent on Tuesday, when Musk vowed that he had “funding secured” at a spectacular $82 billion valuation.
Since that initial tweet, though, he has offered no evidence to back up the statement. Nor has anyone stepped forward publicly — or privately — to say they’re behind the plan. People with or close to 15 financial institutions and technology firms who spoke on the condition of anonymity said they weren’t aware of financing having been locked in before Musk’s posts.
“I don’t really understand the idea of what was suggested in the potential for them to go private,” Dick Weil, chief executive officer of $370 billion asset manager Janus Henderson Group, said in an interview with Bloomberg Television. “That’s obviously an incredibly large valuation to somehow take into the private market.”
All of which could be problematic as the Securities and Exchange Commission intensifies its scrutiny of the company. SEC attorneys already had been gathering general information about Tesla’s public pronouncements regarding manufacturing goals and sales targets, according to two people who asked not to be named because the review is private. Now, the attorneys are also examining whether Musk’s tweet about having funding to buy out the company was meant to be factual, according to one of the people.
“When Musk tweeted this, was he saying this was something that was definitely going to happen? Something that might happen?” said Ira Matetsky, a partner at Ganfer Shore Leeds & Zauderer in New York. “How would a reasonable investor interpret that and was it consistent with the facts as they existed at the time?”
Judith Burns, an SEC spokeswoman, declined to comment. Tesla, which hasn’t been accused of wrongdoing, declined to comment.
Meanwhile, Tesla’s board is forging ahead with its review of a deal to take the company private — without revealing to investors just what the proposal is or how it would be funded.
Directors plan to meet with financial advisers next week and are likely to tell Musk to recuse himself while they evaluate his proposal, CNBC reported Thursday, citing unidentified people familiar with private conversations.