Elon Musk Risks Reputation With Tweets: Bernstein

"Show me the money" is the message that Wall Street is sending Tesla Inc.'s (TSLA) Chief Executive Officer Elon Musk after he took to Twitter this week to propose a $420-a-share go-private deal for the electric vehicle maker.  

Since those jaw-dropping tweets and subsequent letter to Tesla employees laying out his thoughts on the deal, little follow-up has come from the company or its outspoken CEO. And that radio silence could end up hurting Musk’s reputation if nothing but a Securities and Exchange Commission inquiry comes out of the Tweets. (See more: What If Tesla Goes Private?)

Musk's Reputation In The Crosshairs

That’s the read from Toni Sacconaghi, a Bernstein analyst who wrote in a note to clients covered by Bloomberg that without firmer details about the plan emerging, investors would likely “debate  Musk’s credibility and seemingly unhealthy focus on the shares’ price and volatility.” The analyst said it is possible that Musk and his supporters within the company can win over some large institutional and strategic investors to become new investors or remain shareholders in a private company, reducing the funding Musk will need to pull it off. But void of that, the tweets could cause more harm than good to Musk’s reputation, which is already considered by some to be argumentative and impulsive.

When Musk laid out his reasoning behind going private he did point to short sellers or those that bet the stock could go lower. “As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders," Musk wrote to employees, according to Forbes. He also said that by taking the electric vehicle company private it would end "negative propaganda from shorts." (See more: Elon Musk Risks $100B Payout If Tesla Goes Private.)

No Evidence That The Funding Is Secured

According to Bloomberg, Musk hasn’t provided any evidence to back up his Twitter claim that funding has been secured for what would amount to an $82 billion deal. What’s more, no investors either in public statements or in private, have said they back the deal. Bloomberg reported that people with or close to 15 financial institutions and tech firms said they didn’t know that financing had been secured before Musk took to Twitter. In a statement to Bloomberg six of the nine directors at Tesla said the idea of going private was raised with the board by Musk last week and funding was addressed at that meeting. The board members wouldn’t provide more details, noted Bloomberg.  

The lack of detail led to a bit of a sell-off in Tesla shares on Wednesday. The stock finished the trading session down 2.43% or $9.23 to $370.34. Evercore ISI analyst George Galliers said on Bloomberg TV that investors are awaiting more details about the funding. “They are raising a lot of sensible questions around who would be providing the funding and how exactly this might work,” he said.

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