Tesla Inc. stock faltered in the first day of trading since Chief Executive Elon Musk announced that the maker of electric cars would remain a publicly traded firm, capping a 2½-week saga.
On Friday night, Musk said in a post on Tesla’s website that major shareholders told the Palo Alto automaker it was “better off as a public company” and encouraged him to call off his plan to take Tesla private. Musk also said he met with Tesla’s board of directors Thursday, whose members “indicated that they agree.”
Tesla stock finished down 1.1% Monday, at $319.27.
Musk tweeted Aug. 7 that he was “considering taking Tesla private” at $420 a share and that he had “funding secured,” a bombshell announcement that sent the company’s stock soaring. But questions soon arose about who would supply that funding and just how secured it was.
New details emerged over the weekend about the decision to reverse course.
News reports said members of Tesla’s board of directors met with financial advisors from Goldman Sachs and private equity firm Silver Lake on Thursday in a conference room at Tesla’s auto factory in Fremont, Calif. The financial advisors told the board they were confident a deal to take the company private could be made, then left the room, reports said. Musk then told the board he was withdrawing the proposal, according to the Wall Street Journal. It reported that in response, one board member cheered, “Woohoo.”
Saudi Prince Mohammed bin Salman was interested in taking part in a Tesla privatization deal, but the Saudis never made a formal proposal, the Journal reported, citing unnamed sources. And people had pointed out to Musk that Saudi Arabia’s reliance on fossil fuels could clash with Tesla’s stated mission of expanding clean-energy use, according to the New York Times.
The financial presentation by Goldman Sachs and Silver Lake identified other potential investors, including German automaker Volkswagen, but Musk was suspicious of rival car companies, according to the Journal.
Musk was also concerned about shutting out smaller investors. A photo sent to him this month by an elderly shareholder couple wearing Tesla gear and holding a handwritten sign congratulating him on a production milestone had stuck with him, the Journal reported.
Musk had said earlier his tweet about funding was based on meetings with Saudi Arabia’s sovereign fund that left him “with no question” they could strike a deal. But he also said the Saudi support was “subject to financial and other due diligence and their internal review process for obtaining approvals,” among other conditions.
About a week after the initial announcement, a Fox Business reporter tweeted that the Securities and Exchange Commission sent subpoenas to Tesla about the plans to take the company private, with special emphasis on Musk’s declaration about securing funding. Legal experts said the issuing of subpoenas could indicate the SEC had opened a formal investigation.
Musk told the New York Times in a tearful interview that the last year was the “most difficult and painful” of his career. He said that he was working up to 120 hours a week and that friends were “really concerned” about his health.
Speculation grew that Tesla’s board of directors would look to hire an executive to run daily operations at Tesla, similar to the role Gwynne Shotwell occupies at Musk-led SpaceX as company president and chief operating officer.
But on Friday night, Musk showed no indication of wanting to diminish his control of the automaker. He said in his blog post that he was “incredibly excited to continue leading Tesla as a public company,” calling the role a “privilege.”
2:05 p.m.: This article was updated with a closing stock price.
11:05 a.m.: This article was updated to include details about a Thursday meeting of the Tesla board of directors.
8:45 a.m.: This article was updated to include more background about Elon Musk’s plan to take Tesla private and the company’s updated stock price.
This article was originally published at 7:10 a.m.