Tesla shares dip after Elon Musk proposes going private

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Tesla directors have said they knew about Elon Musk's surprise proposal to privatise the money-losing vehicle maker before he tweeted about it and have met several times in the past week to discuss the proposal.

"Given the haphazard process of disclosure last afternoon, our initial impression was that Elon Musk sprung his plan of going private upon the public without consulting Tesla's board of directors or major shareholders", Bernstein analysts said in a note titled "Going private?"

The directors Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice and James Murdoch said: "Last week, Elon opened a discussion with the board about taking the company private". Later in the day it became clear that Musk was in fact serious about the bid to take Tesla private when Tesla published a blog post in Musk's name addressed to all employees and when Musk tweeted that he had already lined up the funding for such a move. The board, they said, had met "several times" over the last week and was actively working to "evaluate" the proposal.

Musk shocked the market, yet again with a tweet on Tuesday that he was considering taking the loss-making company private at $420 a share.

Tesla's shares were down 2.1 percent at $371.70 on Wednesday after closing up 11 percent on Tuesday.

On Tuesday morning, Musk emailed a statement to Tesla employees.

"Who gives $30 to $50 billion to buy back the shares?", asked NordLB analyst Frank Schwope. Among these issues, short-sellers have especially posed a continuous problem for Tesla, and it's no surprise Musk would like to put an end to the roller coaster that their actions can cause, with him highlighting the view that Tesla is one of most shorted companies on Wall Street.

Most analysts were skeptical, but some said a deal could materialize if Musk succeeded in lining up the right funding. "This is out there, even for Tesla", analysts with Barclays wrote Wednesday. The move would also foreclose the option of selling more stock to raise cash every year, a move which Musk has disfavored in recent years. "That sense of the market, investors-so critical for a company like Ford".

Several members of Tesla's board issued a joint statement on the company's investor-relations site. They did not include Mr Musk, his brother Kimbal Musk, and Steve Jurvetson, a venture capitalist.

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