Tesla shares are down again, but the shares of many other carmakers are also down in the wake of Elon Musk’s statements concerning a plan to take the company private.
The CEO’s decision to take the company private on Sunday fell through when he tweeted his change of mind Saturday evening.
Telsa shares are now down another 12 percent, giving it the largest decline in the Bloomberg automobile gauge after the drop of 14 percent last week.
The Bloomberg transportation index is down 6 percent on the week.
But shares of virtually every automaker have dropped following Musk’s announcement that he will quit the company’s board and that he’s not convinced about putting the company into its own public stock.
General Motors, Ford and Fiat Chrysler Automobiles have all declined in the last couple of days.
A note by Barclay’s Bank downgraded the shares of the company to “underweight” from “equal weight” citing concerns about Musk’s plan.
“We are reducing our rating as we expect share price uncertainty to persist in the near term,” it said in a note to clients Saturday. “We reduce our rating as we expect share price uncertainty to persist in the near term.”
“Our concern stems from the lack of a clear and active regulatory framework, future dilution to Tesla shareholders, and a very uncertain level of execution/execution within the Tesla business,” it said.
The company suspended trading in its shares at the market open on Monday for the second time in a week after reports of Musk changing his mind on taking the company private.
Musk unveiled the $72 billion plan to take Tesla private on Twitter earlier this month in a message that was also followed by a strange seven-paragraph email to employees.
“Am considering taking Tesla private at $420,” he wrote on Oct. 4 in a tweet that was followed by a lengthy email to employees. “Funding secured.”
Following its release, questions arose about the validity of the private transaction, and about whether such a deal could ever happen. The deal was regarded as a threat to Tesla employees, who would get a equity stake in a smaller publicly traded company.
Tesla’s $420 offer price is about 1,100 percent above where the shares closed the day before Musk posted his tweets. The company then moved up its scheduled earnings call to Oct. 31, following its third-quarter results scheduled for Thursday.
Musk was up to 400 times longer on Twitter during the first 11 days after his October 3 announcement than he was before that period, according to a statum from the Wall Street Journal.
The WSJ noted that “Dodge CEO Tim Kuniskis said he had made a strong case to Musk. The former General Motors executive, who announced a goal of selling 200,000 cars this year, said he offered in a series of tweets last week to help the CEO figure out ‘how to handle the regulatory entity set up on my terms.’”
At press time, Tesla shares were trading at $303.50.
Watch: Elon Musk Resigns as Tesla’s Chairman of the Board After Second Tweet Controversy
Author: CBS NEWS