Elon Musk tweets on taking Tesla private 'being investigated' by US regulators

Elon Musk announced on Twitter he is 'considering' taking Tesla private
AFP/Getty Images
Ella Wills8 August 2018

US regulators are reportedly investigating Tesla boss Elon Musk's announcement that he plans to take the electric car firm private.

Musk made the shock revelation on Twitter on Tuesday afternoon - in a move that has drawn scrutiny from the US Securities and Exchange Commission.

The regulator is now making enquiries into whether the statement was truthful, according to the Wall Street Journal.

Tesla did not immediately respond to requests for comment, and the agency declined to comment on the report.

The newspaper reported regulators are also questioning whether the disclosure about the proposed buyout in a nine-word tweet fulfils Tesla's legal obligations as a publicly traded company.

Musk announced on social media yesterday that he was "considering" taking the company private and had secured funding for the plan, but he has not provided further details.

He proposed taking the company private at $420 a share, which would value a deal at more than $70 billion.

The statement did not address how the $420-per-share price was established.

Tesla shares fell 2.4 per cent to $370.34 on Wednesday after closing up 11 per cent on Tuesday.

In a statement on Tesla's website, six of Tesla's nine directors said the board had met several times over the last week to discuss such an idea and was "taking the appropriate next steps to evaluate this."

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 company has only posted a quarterly profit twice in its history and has never made money during an entire calendar year, something that Musk has been trying to change by cutting costs, including recent mass layoffs that trimmed Tesla's workforce by 9 per cent.

Additional reporting by Associated Press.

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