Tesla News: TSLA Drops In Early Trading After Abandoning Privatization Plans

Shares of Tesla (TSLA) tumbled in early trading Monday after the latest developments in the electric car manufacturer’s proposed plan to go private. CEO Elon Musk revealed on Friday that he would abandon the buyout plan, shaking investor confidence in a way that became quantifiable Monday morning, according to Reuters.

The company’s stock price dropped by more than 5 percent between premarket trading in the United States and European trading on Monday morning, per Reuters. Tesla did recover a bit by the time markets opened in the U.S., but shares have dropped by 4 percent in U.S. trading as of 10:40 a.m. ET.

Overall, it represents a 15 percent loss from Tesla’s market peak earlier this month. Shares ballooned after Musk unexpectedly declared on Twitter that Tesla would consider going private. His tweet ended with the now-infamous phrase “funding secured.”

On Friday, after weeks of skepticism surrounding Musk’s claims, the enigmatic CEO announced in a company blog post that Tesla would stay public after all. He noted that the process would have been lengthy, cumbersome and not as beneficial for shareholders as he would have hoped.

Throughout August, there was talk of an SEC investigation into Musk’s initial announcement for possible market manipulation or fraud. If he had no secured funding as he claimed, it could have been a problem. Musk eventually revealed he had been in discussions with the Saudi Arabian government’s public fund for two years, but it there never appeared to be a firm deal in place.

Now, Musk’s attention may turn back to attaining profitability for the electric car firm. Tesla has reported huge losses in recent earnings reports, as it tried to ramp up manufacturing of its Model 3 vehicle. Musk still insisted over the summer that Tesla would become profitable soon, but there has been lingering skepticism.

After months of concerns over whether or not the company could efficiently produce Model 3 cars, Tesla opened up the ordering process to the general public for the first time in July. The firm boosted production by building a new assembly line in a large tent outside its plant in Fremont, California.