Tesla lost as much as 4% in early trading and suffered steeper losses in the premarket after closing Friday at $322.82. They pared losses, however, as the trading day progressed to close down 1.1% at $319.27.

Shares have been on a roller-coaster ride since Musk first floated with the idea of privatisation in an Aug 7 tweet, which reportedly sparked a Securities and Exchange investigation. They rallied 11% on that day to close at $379.57; they are off 16% from that peak and off nearly 7% from the close on the day before the tweet.

Weighing in on Monday, Baird analyst Ben Kallo, a longtime Tesla bull, said investors should expect Tesla shares to come under pressure in the near term.

“That said, we expect shares to appreciate over the intermediate term as the focus shifts back to fundamentals, which we believe may be underappreciated.” He stated.

He added that Baird would recommend buying Tesla on any weakness, given it expects a move higher ahead of third-quarter deliveries and results, including a potential bump from Tesla appearing to have made “significant progress on the Model 3 production ramp.”

Baird analysts have held an outperform rating on Tesla since early 2016, with a current price target of $411. Shortly after Musk floated the idea of a $420-a-share buyout, the analysts predicted shares would go even higher , although they’ve never reached beyond an intraday high of $387.46 on Aug 7.

Among the clouds the Baird analyst said he sees hanging over Tesla are a potential SEC penalty, though he thinks the risks on that may be overblown, and that concerns about potential funding may resurface.

Analysts at Evercore ISI said in a note Monday that Both bulls and bears “will be happy to see Tesla remain public, and the stock debate for the ages will rage on.” The going-private talks have proven to be a “three-week distraction that really did not need to take place in the public domain,” they added.

They also commented on Musk’s Twitter habit.

“The negatives outweigh the positives and that this is something that the board should give serious consideration to placing controls around going forward, if they have not done so already,” they stated.

The post Tesla stock drops after Musk abandons plans to go private appeared first on International Finance.

That regulation is one that Musk may or may not have violated when he nonchantly tweeted Tuesday that we was considering taking the electric car manufacturer private and had “funding secured, according to securities lawyers.

Whether it was impluse or design, it is likely that the Securities and Exchange Commission has already opened an investigation and is looking for documentation to back up Musk’s comments, according to former SEC enforcement lawyers.

The Wall Street Journal reported on Wednesday that the SEC has, in fact “made inquiries” to find out whether his claim was true, citing people who are familiar with the matter.

“I can’t imagine that the enforcement division hasn’t opened a file, that they are not calling his counsel or him and saying ‘we would like whatever papers you have about this, if you have written anything down, if you have talked to lenders, if you have materials about that we would like to see them,'” said Tom Gorman, a former senior enforcement attorney with the SEC and a partner at Dorsey & Whitney in Washington, D.C.

“And right after we have finished seeing all that stuff, we would like to talk to you.” he added.

Investors are not too convinced that Musk has actually secured funding. If that is true, then it could mean that both him and Tesla are in for some extremely rough waters ahead.

“There is skepticism as to where this money comes from. It doesn’t make sense,” Efraim Levy, an analyst at CFRA, told CNBC. “The reason it is trading at a discount is because of uncertainty as to whether the deal will come to fruition. If it doesn’t come through, the stock is going to crater.”

“He is claiming there is a specific source of the funding so that had better be true. He has also claimed there is a specific amount available for funding. That has to be true. Otherwise, even if it’s not manipulation it would be fraud, so he’s got two potential areas of difficulty right there,” former SEC Chairman Harvey Pitt told CNBC.

Musk’s frequent complaints about “relentless attacks from short sellers” have raised questions about whether or not he was intentionally trying to drive the shares higher, which would meet the definition of market manipulation and carry possible criminal penalties, securities lawyers say.

Tesla still has not specified where  it’s getting the more than $71 bn that it would cost to take the company private. Wall Street bankers also don’t know, suggesting Musk has secured financing elsewhere. But that seems implausible given the size of the deal, which would require multiple banks, and cult-like interest in Musk and Tesla, dealmakers and analysts say.

If Musk’s statements weren’t true, he runs the risk of paying damages to investors who lost money on his tweets as well as criminal prosecution, Pitt said.

Peter Henning, a law professor at Wayne State University, called it “backwards corporate governance.”

“You don’t announce a price and then negotiate. There are a lot steps left in this,” he said. “There is a whole process they have to go through or they are going to get the daylights sued out of them.”

Investors, meanwhile, are still confused.

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