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Elon Musk is still seeking funding to take Tesla private, says report

This week, Elon Musk shocked markets with an unexpected plan to take Tesla private, removing all shares from public markets at an estimated cost of at least $50 billion. But while Musk claimed that funding for the move had already been secured, unnamed sources in a recent Bloomberg report say Tesla is still working to line up financial support from a variety of different sources.

According to the report, Tesla is currently seeking funding from a broad pool of investors, in part to avoid a concentration of ownership. Discussions are still in the early stages, and include fundamental questions about how the deal and resulting holdings will be structured. Additionally, Bloomberg spoke to individuals close to 16 financial and tech institutions who were not aware of any pre-arranged funding. Reached by The Verge, Tesla declined to comment.

The report casts new doubts on Musk’s initial description of the plan, which boasted “funding secured.” If that description proves to be inaccurate, Musk could face both civil and criminal penalties for securities fraud. Tesla’s stock shot up 10 percent in response to the announcement, and the Securities and Exchange Commission has already made inquiries into whether Musk’s announcement was misleading, although there’s no evidence that a formal enforcement action has been launched.

Musk explained his logic for taking the company private in a blog post on Tuesday, saying exposure to public markets makes the company vulnerable to short-term demands and bad-faith investments. “As the most shorted stock in the history of the stock market,” Musk wrote, “being public means that there are large numbers of people who have the incentive to attack the company.” Many of those short positions have been significantly weakened by Tesla’s recent stock gains.

Still, Musk has maintained that all the necessary investment for the buyout is in place. “Investor support is confirmed,” he tweeted shortly after Tuesday’s post. “Only reason why this is not certain is that it’s contingent on a shareholder vote.”


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