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Tesla's stock drops after Elon Musk gives up taking company private

Key Points
  • Tesla chief executive Elon Musk said late Friday he is ditching efforts to take the company private.
  • The company's shares fell more than 6 percent from their level on Aug. 7 (just before Musk tweeted that he had "funding secured") through Friday's close.
  • Tesla is now aiming to produce 6,000 vehicles a week, a rate it hopes to achieve by the end of this week.
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Tesla shares fell on the first day of trading after CEO Elon Musk said he is ditching efforts to take the company private.

The electric car maker's stock closed Monday trading down 1.1 percent. During premarket trading, it sank more than 5 percent. Musk announced in a blog post late Friday that consultations with Goldman Sachs and Morgan Stanley convinced him that most of Tesla's shareholders opposed the privatization proposal.

Through Friday's close Tesla shares fell more than 6 percent from their level on Aug. 7 (just before Musk tweeted that he had "funding secured").

"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," Musk wrote Friday. "Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was 'please don't do this.'"

The CEO's decision to stand down on privatization may not absolve the carmaker of scrutiny. The Securities and Exchange Commission is investigating whether Musk's original tweet violated securities law, according to The New York Times.

With the Silicon Valley billionaire's motion for a Saudi Arabia-backed buyout no longer under consideration, stakeholders will likely double-down Tesla's goal to become profitable.

In the company's most recent earnings, it backed its prior forecast that called for profitable third and fourth quarters as Model 3 production picks up.

"From an operating plant standpoint, from onwards I really want to emphasize our goal is to be profitable and cash-flow positive for every quarter going forward," Musk said on the earnings conference call. He added that recessions, or unexpected events could derail the plan.

Tesla is now aiming for a 6,000 Model 3 vehicle per week rate, which it hopes to achieve by the end of this week. By year-end it hopes to increase production to a rate of 10,000 a week.