‘Private’ mess:

Musk’s credibility goes from bad to worse

FILE- In this June 14, 2018, file photo, Tesla CEO and founder of the Boring Company Elon Musk speaks at a news conference in Chicago. For years, Tesla’s board remained almost invisible, staying behind the curtain as Musk guided the electric car maker to huge stock price increases. Now, given Musk’s recent questionable behavior, experts say it’s time for the board to step onstage and take action on the company’s leadership. (AP Photo/Kiichiro Sato, File)

By TOM KRISHER

AP Auto Writer

DETROIT — First it was the shocking tweet that funding was secured and Tesla may go private, then a statement that the money wasn’t locked down after all. Two weeks later it’s never mind, the whole deal is off.

Welcome to the disarray of Elon Musk, the impulsive genius and architect of cutting-edge car, rocket and solar panel companies built nearly from scratch.

Chaos, though, comes with a price. Experts say it all could wind up with Tesla exposed to a fine for misleading investors. And even though Musk has almost legendary status, the episode could further erode his credibility with stakeholders who have endured multiple broken promises and years of losses as a public company.

“Prior to the go-private episode, his credibility was in question, although investors still had overall confidence in the guy,” Erik Gordon, a business and law professor at the University of Michigan, said Saturday. “This whole go-private episode has taken his credibility close to zero.”

The bizarre story began Aug. 7 when Musk, while driving to the airport, tweeted he was considering taking the company private and that funding had been secured for the deal. Investors would be paid $420 per share, a 23 percent premium over the Aug. 6 closing price. No other details were given, but Tesla’s stock shot up 11 percent that day. At $420, buying all Tesla shares would cost around $72 billion.

Then, in a blog post six days later, Musk wrote the money wasn’t locked down, revealing that Saudi Arabia’s Public Investment Fund was the source of the cash but was still doing due diligence. Musk said the Tesla board and some big investors had been told he was considering taking the company private before he tweeted that information. He said he tweeted the disclosure so everyone could have the information.

Musk, who owns 20 percent of Tesla, also said he expected only a third of shareholders to sell, meaning the deal would be valued around $24 billion.

Late Friday came a statement from Musk saying that after talking to investors, the plan to go private would be scrubbed. Big institutional investors told him they had limits on how much they could sink into a private company.

The episode drew attention from the U.S. Securities and Exchange Commission, which reportedly is investigating Tesla for possible manipulation of the stock price. At least two lawsuits seeking class-action status also have been filed alleging Musk broke securities laws by making it sound like financing for the buyout was lined up.

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