Tesla Inc Chief Executive Officer Elon Musk'splan to take the electric auto maker private raised doubts among Wall Street analysts about the billionaire' s ability to gather enough financial backing to complete the deal.
As Tesla's board of directors rallied Wednesday behind chief Elon Musk's extraordinary push to take the all-electric automaker private, a growing contingent of investors, analysts and former regulators voiced their doubts that the deal would ever take off. The board said only that Musk had "addressed the funding for this to occur".
In the last week, Tesla's board has met "several times" to discuss Musk's proposal and "is taking the appropriate next steps to evaluate this".
His message followed a report that a Saudi investment fund had taken a almost 5% stake in Tesla.
Some Wall Street analysts are skeptical of Musk's ability to gather the financial backing to complete such a deal.
Musk, on Tuesday, announced he was mulling buying the company out for $420 per share. But after the markets opened Wednesday morning, Tesla's stock edged downward about 1 percent, to $375. In his first tweet he said funding was secured but provided no details.
Cowen analyst Jeffrey Osborne told clients in a note Wednesday that he didn't believe Tesla's current business "support a valuation anywhere close to $420 per share". "And if you stay as a shareholder you get less information than before and you depend more and more on Elon Musk".
In that time, Tesla short-sellers - Musk's sworn enemies - may have lost more than $800m, according to estimates from financial-technology firm S3 Partners, while his 20% stake reportedly gained $851m.
"This proposal to go private would ultimately be finalized through a vote of our shareholders", Musk said in explaining the potential move. And as the stock price has climbed this year, so too have the bets against it. "Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company".
A statement was issued by six members of the electric carmaker's board after Mr Musk tweeted to say he had the funding to de-list the company. Tesla's other board members are Musk, his brother Kimbal Musk and venture capitalist Steve Jurvetson.