August 9, 2018 / 6:44 PM / 4 months ago

Tesla shares fall 5 percent on Wall St scepticism, SEC probe reports

NEW YORK (Reuters) - Tesla Inc’s (TSLA.O) shares slipped more than 5 percent to a two-day low on Thursday, wiping out all the gains fuelled by Chief Executive Elon Musk’s recent tweet announcing a plan to take the company private.

Shares fell early in the day following Wall Street’s sceptical response to Musk’s idea of going private and a Wall Street Journal report on Wednesday that the U.S. Securities and Exchange Commission was asking Tesla why Musk announced his plans on Twitter and whether his statement was truthful.

The shares fell further on Thursday after Bloomberg reported that the SEC already had been looking at Tesla’s public statements, citing two unnamed people it said were familiar with the matter.

Tesla disclosed in its most recent quarterly report that it has “received requests for information from regulators and governmental authorities,” including the SEC. The company did not disclose in its filings the details of those requests or its responses.

FILE PHOTO: A Tesla sales and service center is shown in Costa Mesa, California, U.S., June 28, 2018. REUTERS/Mike Blake/File Photo

Tesla and the SEC declined comment.

Ratings agency Moody’s also said on Thursday that Tesla’s consideration of going private based on Musk’s letter to shareholders published after his tweets on Tuesday was negative for the company’s credit outlook.

Tesla’s future rests largely on its Model 3 sedan, and it is ramping up production after months of what Musk called “manufacturing hell.” It also faces $1.2 billion in convertible debt maturities through March of next year, the ratings agency wrote.

“Although the company’s cash generation will improve during the second half of 2018 and over the coming year as Model 3 production improves, we continue to expect that Tesla will need to access the capital markets in order to fund its operating requirements and repay the maturing convertible debt obligations,” Moody’s wrote.

Wall Street analysts have expressed doubts about the billionaire’ s ability to gather enough financial backing to complete a going-private deal.

Tesla shares were trading at $350.69, down about $6 from where they were before Musk’s tweet on Tuesday sent them soaring to a near one-year high.

Reporting by Saqib Iqbal Ahmed; additional writing by Peter Henderson; editing by Bill Rigby and Meredith Mazzilli

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