Musk: Tesla Will Remain Public

After an Aug. 7 tweet about taking Tesla Inc TSLA private that sparked an SEC investigation, CEO Elon Musk said Friday the electric vehicle manufacturer will stay public. 

Tesla’s shareholders are largely opposed to a go-private deal, Musk said in a blog post late Friday.

“Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don’t do this,’” the CEO said in the post. 

Musk’s tweet — which he later admitted in a New York Times interview used a rounded-up share price of $420 as a marijuana reference — made the widely scrutinized claim that Tesla had “funding secured.” 

Tesla shares were trading at $322.82 at the close Friday.

Focus On Model 3, Profitability

In Friday’s blog post, Musk said he worked with Silver Lake, Goldman Sachs Group Inc GS and Morgan Stanley MS to analyze a go-private deal and concluded the process “would be even more time-consuming and distracting than initially anticipated.”

Tesla must remain focused on ramping Model 3 production and achieving profitability, he said.
“We will not achieve our mission of advancing sustainable energy unless we are also financially sustainable.”

Musk informed Tesla’s board of his conclusion that the company should remain public in a Thursday meeting, the company’s independent board members said in a Friday statement.

The special committee formed to evaluate the deal has been dissolved, and Musk continues to have the board’s backing, the six directors said.

“The board and the entire company remain focused on ensuring Tesla’s operational success, and we fully support Elon as he continues to lead the company moving forward."

Munster: 'Work For Musk To Do' To Rebuild Trust

In addition to the reasons Musk cited for dropping a privatization deal, the decision may have also come due to his media interactions and an investor perception that he’s difficult to work with, Loup Ventures managing director Gene Munster said in a Saturday post.

“We still think there is work for Musk to do to rebuilt that trust in the market.”

Loup had forecast a 75-percent chance Tesla would go private.

The tech-focused venture capital firm still thinks Tesla would have more value as a private entity, and sees the company’s shares as “undervalued” given its stake in EVs, autonomy and renewable energy, Munster said.

Munster predicts Musk will continue to lead Tesla; that class action lawsuits tied to the “funding secured” statement could dog the company for a year; and that Tesla will be fined a small amount by Nasdaq for the Aug. 7 tweet.

Related Links: 

Tesla's Stock Continues Fall After JPMorgan Cuts Target To $195

These Analysts Love Tesla's Potential, But Balk At Its Valuation