New York: Shares in Tesla Inc fell just under 3 per cent on Monday after Chief Executive Elon Musk abandoned his plan to take the electric carmaker private, with analysts saying the company needed new blood among senior management to prop up its standing with investors.

The billionaire entrepreneur said in a blog post late on Friday that consultations, done with the help of Goldman Sachs and Morgan Stanley, had shown most of Tesla’s existing shareholders opposed the deal that he proposed on Twitter three weeks ago to widespread shock on Wall Street.

“We are hopeful that ... the past 17 days will lead the Board down the path to bringing on a more operational CEO or at a minimum a COO,” Cowen and Co analysts said in a note to clients.

Tesla’s shares, already down nearly 15 per cent from a peak on Aug. 7 when Musk tweeted that he had “funding secured” for a buyout at $420 (Dh1,543) a share, initially fell more than 5 per cent in European and premarket trading in New York.

They recovered, however, to stand down just 2.8 per cent lower at $314 by 8.30 e.t (Eastern Time).

Notes from Wall Street analysts questioned Musk’s credibility going forward in the face of a possible investigation by the US Securities and Exchange Commission into the factual accuracy of an Aug. 7 tweet that funding for the buyout deal was “secured”.

“Musk’s involvement in the company is critical, but now more than ever a solid #2 — someone with strong operational background that can help Tesla move from ideas to execution — is crucial,” analyst Joseph Spak from RBC Capital Markets wrote in a client note.

Tesla said on Sunday it was not searching for a chief operating officer.

“While we are always looking for highly talented executives (...) there is no active COO search,” a spokesman said by email.

With Musk’s idea for a buyout backed by Saudi Arabia’s sovereign wealth fund now off the table, attention was zeroing in on Tesla’s efforts to become profitable, its cash reserves and what steps Musk could take to raise fresh capital.

Tesla had $2.78 billion in cash at the end of the second quarter, after a record $718 million loss.

In early August, before the buyout plan was made public, Tesla reiterated a forecast that it would achieve a profit in the third and fourth quarters, under normal accounting rules, and Musk said the company would not need to raise more cash.

A Tesla spokesman on Sunday also referred back to those previous comments.

“With its long term mission intact but short term growth shaky, serious gaps in execution skills and a board under pressure for not assuming its duties, now may be the time for third parties to get involved, be it from technology or even oil,” Jefferies analyst Philippe Houchois told clients.

One of Tesla’s biggest challenges is ramping up production of its latest vehicle, the Model 3, which is critical to its profitability goals.

Monday’s fall would still leave shares in the company 27 per cent above a low of $244.59 hit on April 2, a day before the electric carmaker released its production and Model 3 deliveries report for the first quarter.

— Reuters