Shares in Tesla Inc lost almost 5 percent on Monday after it abandoned a plan to take the electric carmaker private, with some analysts suggesting it should either replace Chief Executive Elon Musk or appoint another strong senior manager.
The billionaire entrepreneur said in a blog post late on Friday that consultations, done with the help of Goldman Sachs and Morgan Stanley, had shown most of Tesla's existing shareholders opposed the deal that he proposed on Twitter three weeks ago to widespread shock on Wall Street, report Agencies.Tesla's shares, already down nearly 15 percent from a peak on Aug. 7 when Musk tweeted that he had "funding secured" for a buyout at US$420 a share, fell 4.4 percent to US$308.63 in trading before the bell in New York. A series of notes from Wall Street analysts questioned Musk's credibility going forward in the face of a possible investigation by the U.S. Securities and Exchange Commission into the factual accuracy of an Aug. 7 tweet that funding for the buyout deal was "secured". "Musk's involvement in the company is critical, but now more than ever a solid #2 - someone with strong operational background that can help Tesla move from ideas to execution - is crucial," analyst Joseph Spak from RBC Capital Markets wrote in a client note.
With Musk's idea for a buyout backed by Saudi Arabia's sovereign wealth fund now off the table, attention was zeroing in on Tesla's efforts to become profitable, its cash reserves and what steps Musk could take to raise fresh capital.
Tesla had US$2.78 billion in cash at the end of the second quarter, after a record US$718 million loss.
In early August, before the buyout plan was made public, Tesla reiterated a forecast that it would achieve a profit in the third and fourth quarters, under normal accounting rules, and Musk said the company would not need to raise more cash.
A Tesla spokesman on Sunday referred to those previous comments.
"With its long term mission intact but short term growth shaky, serious gaps in execution skills and a board under pressure for not assuming its duties, now may be the time for third parties to get involved, be it from technology or even oil," Jefferies analyst Philippe Houchois told clients.