Tesla’s stock drops 3% after Elon Musk gives up taking company private

Tesla shares fell on the first day of trading after Chief Executive Elon Musk said he is ditching efforts to take the company private.

The electric car maker’s stock dropped 3.3 percent in premarket trading on Monday after Musk said 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.

Tesla 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.

“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 car maker 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 force majeure events could derail the plan but the goal is to be achieving positive GAAP income and cash flow “every quarter from here on out.”

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

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