By Joyce Yu
Philadelphia, PA–Tesla shares fell as much as nearly 3% on Monday morning after Chief Executive Elon Musk abandoned his plan to privatize the electric carmaker. Analysts, however, are calling upon the company to recognize the importance of fresh blood among senior management.
“I met with Tesla’s board of directors yesterday and let them know that I believe the better path is for Tesla to remain public,” Musk said in a statement published on Tesla’s website on Friday. “The board indicated that they agree.” He further added that consultations completed with assistance from Goldman Sachs and Morgan Stanley also show most of Tesla’s existing shareholders opposed the deal.
“We are hopeful that … the past 17 days will lead the Board down the path to bringing on a more operational CEO or at a minimum a COO,” Cowen and Co analysts noted in a report to clients. Echoing the same view, Joseph Spak from RBC Capital Markets wrote in a client note that “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.” Nevertheless, Tesla said on Sunday it was not searching for a chief operating officer.
Earlier this month, Musk tweeted that he had “funding secured” for a buyout at $420 a share, sending Tesla’s share price to new highs and subsequently wild ranges. Down nearly 15% from a peak on Aug. 7, Tesla shares are still 27% higher from its low in February.
A cofounder of Tesla, Musk was put under spotlight of late, but not in a glamorous way. He angered the Wall Street by ignoring some questions from analysts, calling these questions boring; he posted several controversial posts, including one in which he insulted a man who helped rescue a group of Thai boys trapped in a cave. His recent tweets on Tesla privatization are challenged by the Securities and Exchange Commission for misleading investors. In an emotional interview with The New York Times earlier this month, Musk opened up about the tremendous stress he is struggling with. He admitted he was having trouble sleeping as he fought to keep Tesla’s business on track.
