Saudi Cuts Its Exposure To Tesla: Report
It’s time to cringe the eyebrows of the management of Tesla as Saudi Arabia has withdrawn an insurance policy from its investment in the company, which was initiated to diversify the economy of the country. This has significantly reduced the net exposure of the stock. To be precise, the Public Investment Fund or PIF of Saudi Arabia has closed about 4.9% of the stakes in Tesla. This clearly states that the PIF still has the shares with it but has withdrawn the other positions that safeguarded the company from a drop in the stock price.
This news came only a few months after the CEO of the company, Elon Musk had declared the company has enough funds for it to become private. This issue was not buried in a jiffy. In fact, fraud charges were thrown at the CEO from the Securities and Exchange Commission. In September, he agreed to the demands and decided to resign from his position in the company and also pay a fine of $20 million. Also, he committed to appointing new members for the board of the company.
The stake of PIF was first declared in August, immediately after the CEO came up with an unrealistic claim. Along with claiming that the company has sufficient funding to make it private at $420 each share, he mentioned that Saudis will support the buyout. However, these claims were later tagged as misleading and baseless.
The Financial Times has stated that the PIF, in association with J. P. Morgan Bankers, has succeeded in erecting the hedges in its place once the market closed on 17th January. The next day, Tesla came with the announcements of layoffs and also warned that the company is about to travel on a bumpy road after which the value of the shares of the company depleted by15%.