Musk said on Twitter on Tuesday that he was considering withdrawing from the market the stock price of the deficit electric auto manufacturer at a price of United States $ 420 per share, a move that would value an eventual agreement in excess of USA $ 70 billion. In a classic go-private transaction, a small group of investors would buy Tesla's shares and become Tesla's sole owners.
It all began when Musk tweeted about a plan to take electric vehicle manufacturers Tesla private, signing off his message with the words: "Funding secured".
It took about two hours before Tesla posted a Musk email to company employees on its website elaborating on his reasons for wanting to do the deal, making it clear he was serious.
Tesla stock has declined sharply in light of the uncertainty, dropping to $354 midday Thursday. According to a Bloomberg report, the SEC's San Francisco office was already investigating the company and the recent round of tweets escalated its interest.
Musk followed up his tweets with several others, easing shareholders' concerns by explaining that their stakes can remain in the company in a special fund, or that they can sell them off at $420 each. Tesla is and probably always will be a company that will remain underneath the spotlight, so nearly any actions taken by the company itself or Elon Musk as an individual or CEO will have adverse effects on its stock price.
Tesla didn't respond to requests for comment Wednesday. It is not clear if PIF is interested in financing Musk's proposed take-private deal. Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk.
Tesla shares were suspended from trading for 90 minutes, during which the firm announced in a regulatory filing that the company is indeed looking at such privatization possibility although no decision has been made.
Is Elon Musk's sensational tweet legal?
"I do not know how he thinks that's going to work", said Stephen Diamond, who teaches securities law and corporate governance at Santa Clara University's School of Law.
Tesla is still working its way out of what Mr Musk called "production hell" at its home factory in Fremont, California, where a series of manufacturing challenges delayed the ramp-up of production of its new Model 3 sedan on which the company's profitability rests.
Some on Wall Street shared that view.
The six board members who issued the statement on Wednesday included James Murdoch, chief executive of Twenty-First Century Fox Inc and Brad Buss, who was the chief financial officer of solar panel maker SolarCity until it was bought by Tesla in 2016.
Tesla needs cash for its $2 billion factory in China, to open more stores and to pay off the debt that's coming due in the next eight months. That will make it more hard for companies to carry heavy debt loads - and taking Tesla private would means taking on a great deal of debt.