Investing.com – Luxury carmaker Tesla (NASDAQ:TSLA) fell almost 6% in pre-market trading after Chief Executive Elon Musk reversed his decision to take the company private.
Musk said in a blog post on Friday that his decision to abandon a proposed $72 billion buyout was motivated by existing Tesla shareholders. Instead, he plans to focus on increasing production of the Model 3 and becoming profitable, he wrote.
“Given the feedback I’ve received, it’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company...I knew the process of going private would be challenging, but it’s clear that it would be even more time-consuming and distracting than initially anticipated. This is a problem because we absolutely must stay focused on ramping (up the) Model 3 and becoming profitable,” Musk said.
Tesla lost a record $718 million in the second quarter, leaving it with $2.78 billion in cash. Tesla has forecast that it would achieve a profit in the third and fourth quarters, but key to that is increasing production of its latest model. The company has struggled to produce and deliver its vehicles on time.
On August 7 Musk tweeted that he had “funding secured” for a buyout at $420 a share, prompting many to wonder whether or not he had the money and if he violated securities laws.
Both Musk and Tesla face investor lawsuits and a U.S. Securities and Exchange Commission investigation into the accuracy of Musk’s tweet.
The company was down 5.52% to $305.00 in premarket trading as of 4:44 AM ET (8:44 GMT).
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