Tesla shares tank as SEC 'intensifying' probe into tweet

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The company declined to comment on whether its CEO's financing comments were true, while the U.S.

By taking Tesla private, Musk believes that the company will be able to sharpen its long-term focus of revolutionizing an automobile industry dominated by fuel-combustion vehicles without having to cater to investors' fixation on how the business is faring from one quarter to the next.

The US Securities and Exchange Commission has contacted Tesla to ask about Mr Musk's assertion on Twitter that funding for his proposed deal was "secured", the Wall Street Journal reported on Wednesday.

Tesla's board said on Wednesday it was considering withdrawing the company from the stock exchange, a day after the company's chief executive Elon Musk surprised shareholders with the idea of launching the largest buyback of shares based on debt. Putting in place the structure employed by SpaceX would provide investors with an avenue to sell their stock in the future should Tesla go private by removing its shares from trading on the Nasdaq Stock Market, Prasad said.

Musk has also said he would be looking to keep his ownership of Tesla at around 20 percent, and that a special objective vehicle, like the one that exists at his aerospace company SpaceX, would allow Tesla shareholders to remain invested if they so choose. And Bloomberg News reported Thursday that regulators were already gathering information about Tesla's public statements about manufacturing goals and sales targets, and intensified their scrutiny after the Musk tweet. "Funding secured." That tweet sent shares of the electric carmaker up 4 percent within one minute.

No details about funding have been disclosed though. Though nothing more than a preliminary investigation for the time being, the SEC will be exploring whether or not Musk's statement was made in earnest. That has some experts raising an eyebrow. Many people have criticized Elon Musk over this move as they feel it is a desperate attempt by the billionaire philanthropist to have more control over the company.

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David Whiston, an equity strategist at Morningstar who covers the United States auto industry, said he was confused by Musk's tweets, which he said indicated Musk had both the funding and the shareholder votes necessary to take the company private.

Some analysts have suggested that Musk could convince Tesla's top shareholders, such as Fidelity Investments and China's Tencent, to roll their equity stakes into the deal, thereby significantly reducing the amount of money needed to be raised. "Otherwise, why wouldn't you just wait until you're definitely doing a deal to say something?"

Skepticism about the legitimacy of Musk's proposed deal surfaced nearly immediately after Musk dropped the bombshell on his Twitter account a few hours after the stock market opened Tuesday.

So, this begs the question: Did Saudi see an opportunity for investment in Tesla, or was it Musk who found a prime opportunity for fundraising and share-value inflation upon the reveal of Saudi interest?

The SEC routinely makes inquiries about companies' activities. The fund owns between 3% and 5% of Tesla's total stock, meaning the stake is likely worth $US1.7 billion to $US2.9 billion.

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