Tesla board evaluating CEO Musk's idea to take company private

Flags fly over the Tesla Inc. Gigafactory 2 which is also known as RiverBend a joint venture with Panasonic to produce solar panels and roof tiles in Buffalo New York

Even for Musk, who is famous for firing out controversial tweets, Tuesday's message about possibly taking Tesla private astounded the Internet.

The agency declined to comment and Tesla did not immediately respond to requests for comment.

The statement says Musk "addressed the funding for this to occur" in the conversations.

Former SEC chair Harvey Pitt told CNBC that while the United States stock market regulator permits executives of publicly listed companies to use social media to make statements about their businesses, Musk's tweet was still "highly unprecedented".

Tesla's board, a nine-member group that includes Musk's younger brother Kimbal, issued a belated statement Wednesday morning saying Musk had "opened a discussion" last week with the board about the benefits of taking Tesla private.

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"They're being bombarded with questions that we don't think are as relevant to the long-term value of the company", said Sam Korus, an analyst for ARK Investment Management, which had 443,874 Tesla shares as of June 30.

Tesla stock, which has been on the rise for days, skyrocketed after the tweet and ended Tuesday up 11%.

Musk said that he was considering taking the loss-making electric carmaker private at $420 a share, which would value a deal at more than $70 billion. "The board has met several times over the last week and is taking the appropriate next steps to evaluate this". Many initially thought it was Elon Musk's attempt at a bad joke about marijuana, because "420" has always been associated with pot.

At the time of the talks, Tesla was trading at just over $300 a share.

Musk laid out his reasoning for going private in an email to Tesla employees yesterday, which was subsequently posted on Tesla's website.

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"It's very hard to put leverage on this company", due to its negative cash flow and "operational issues", Scott said Wednesday on Bloomberg Television.

Tesla's CEO also laid out what he envisions as the ideal path for going private. He said funding was "secured", without elaborating. The company already has a $2 billion investment from Saudi Arabia's sovereign fund as well as Tencent, which took a 5 percent stake in 2017.

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 General Motors Co. He wants every shareholder to have the option to stay with the company as private investors. Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk.

Musk holds "about 20 percent of the company now", the statement said, and made clear that he doesn't see that changing whether Tesla is private or public.

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