Tesla Inc., (NASDAQ: TSLA) shares have seen the worst decline of 8.9% on Friday following the speculations of the company going private. It was the largest drop the company has ever seen in the last two years. Tesla Inc.’s board of directors, who are personally very close to Elon Musk, the Chairman and CEO of the company, are now torn between their loyalty towards larger-than-life leader and their responsibility towards the shareholders.
Musk’s surprising interview with the New York Times has also raised concerns about his health, Ambien use and tweeting while driving. Musk says that he did not receive any calls from the “irate directors” as media speculated. Earlier this month, Musk tweeted that the company has “funding secured” to go private. After the tweet caused mayhem among the stakeholders, he agreed not to tweet again on the “possible” transaction without contacting the board of directors.
Musk isn’t only running Tesla, he is also the Chairman and CEO SpaceX, an innovative rocket manufacturing company. Apart from these two, he is the founder of two other entities, which he has to take care of. Running four companies at a time demands a lot of time and this is the factor the shareholders are concerned about, especially after his, “going private” tweet.
According to Stephen Diamond, an associate professor of law at Santa Clara University who specializes in corporate governance, “It’s clear that Musk cannot continue to run four companies at a time, Tesla needs and deserves a full-time, exclusive CEO. But the first question the board needs to clarify is this: Is Tesla for sale, or not? If they are going to entertain this go-private idea of Musk’s, they are obligated to get the highest share price possible.”
After reaching a record high of $387.46 on August 7, Tesla has seen its worst week since 2016 as the shares crashed down to $305.50 on Friday.