Key Words: ‘The corporate-governance disaster that is Tesla continues,’ says one of the fiercest critics of Musk and company

Jim Chanos, the prominent investor at the head of hedge fund Kynikos Associates, has some choice words for Tesla Inc. and its board a day after CEO Elon Musk put the kibosh on a plan to take the electric-car maker from out of public hands:

‘The corporate-governance disaster that is Tesla continues. Keep in mind that Musk informed the board on Thursday, according to his Friday night post.’

Jim Chanos

Musk in a blog post wrote on Friday that “given the feedback I’ve received, it’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company.”

Musk stunned fans and critics of Tesl TSLA, +0.85% alike on Aug. 7 when he announced plans to take the car manufacturer private at $ 420 a share, describing that he had “funding secured,” suggesting that the process was in its later stages.

Read: Elon Musk says Tesla will remain a public company, and he will run it

The controversial announcement set off a firestorm that reportedly sparked an investigation by the Securities and Exchange Commission and a host of investor lawsuits, with questions swirling about the CEO’s intentions.

Earlier: Elon Musk describes ‘excruciating’ year, says ‘worst is yet to come’

Chanos is no fan of Tesla. On the day of Musk’s go-private Twitter missive, the famed short seller — meaning that he places wagers that come good only when a company’s shares lose value — said the bounce that Tesla enjoys from bearish investors being squeezed is the only positive narrative that the company has: “The short position is the best thing the stock has going for it. ‘Musk vs. The Shorts’ is a far better narrative than ‘Tesla vs. Mercedes/Audi/Porsche,’ ” Chanos told CNBC.

Tesla’s stock rose 11% to $ 379.57 on the day Musk tweeted about his plan. But since that point it has been less buoyant, with shares sinking by 5.8% as of Friday’s close.

That said, Tesla shares haven’t been a short-seller paradise.

So far this year, they have climbed 3.7%, and the stock performance thus far in August puts shares on track for a gain of 8.3%, according to FactSet data. By comparison, the S&P 500 index SPX, +0.62% has gained 2.1% in August and is on track to climb by 7.5% in the first eight months of 2018, while the Dow Jones Industrial Average DJIA, +0.52% has advanced 1.5% this month so far and 4.3% to this point in 2018.

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