Elon Musk isn't kidding, Tesla board confirms TSLA could go 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

Shares rocketed up 11 percent after Musk's grand reveal Tuesday, with some expecting they would hit $420 - the price Musk had promised shareholders would receive once the company had finalized its go-private transformation. A SoftBank spokesman declined to comment. This included discussing how being a private company could better serve Tesla's long-term interests.

Former SEC chair Harvey Pitt told CNBC that while the U.S. 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".

Board members said that Tesla boss Elon Musk and had held several meetings about the move in the past week.

On Wednesday, Tesla's board said it was evaluating the proposal.

The eccentric Musk announced the bombshell move Tuesday on Twitter, writing that he had secured funding to buy Tesla Inc.'s shares at $420 each.

While Tesla's board of directors might approve Musk's idea of taking the automaker private, current shareholders have the final say. The statement did not address how the $420-per-share price was established. Many initially thought it was Elon Musk's attempt at a bad joke about marijuana, because "420" has always been associated with pot. Tesla was trading around $300 per share in April 2017 when the talks reportedly fell through.

Musk is already CEO of another private company: SpaceX.

In a later statement to employees and posted on Tesla's blog, Musk explained: "Being public. subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term".

"What does Musk mean by 'funding secured?"' asked Toni Sacconaghi, an analyst at Bernstein who has always been bearish on Tesla shares.

China's Tencent Holdings Ltd (0700.HK), which took a 5 percent stake in Tesla past year, could also be a possible partner.

He said that would allow Tesla to "operate at its best, free from as much distraction and short-term thinking as possible".

There still are near-term execution risks around ramping up Model 3 production and the ability to generate cash, Jonas believes.

Also on Tuesday, the Financial Times reported that Saudi Arabia's public investment fund - a major backer of SoftBank's fund - had invested roughly $2 billion in Tesla for a stake representing 3% to 5% of the company. Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk.

Despite the board's statement, it was clear early Wednesday that the euphoria had worn off over Musk's bold claim that he had the funding secured to take the electric-car maker private.

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