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Tesla's board has confirmed that it will consider the proposal by chief executive Elon Musk to take it private.
A statement was issued by six members of the electric carmaker's board after Mr Musk tweeted to say he had the funding to de-list the company.
The board had "met several times over the last week" to discuss going private, the statement said.
They said this "included discussion as to how being private could better serve Tesla's long-term interests".
Mr Musk said in his tweet on Tuesday that shareholders would be offered $420 (£326) per share, valuing the business at more than $70bn.
This would make it the biggest deal of its kind, surpassing the purchase of utility TXU Corp in 2007 for $44bn by a consortium.
The brief statement by six of the nine board directors said Mr Musk had "opened a discussion with the board" about taking the company private last week.
The discussions "addressed the funding for this to occur", the six directors added. They did not include Mr Musk, his brother Kimbal Musk, and Steve Jurvetson, a venture capitalist.
'Irregular' announcement
The board statement came amid questions about how Mr Musk opted to disclose the possible de-listing with investors.
While companies are allowed to make announcements via social media, typically they also make a simultaneous regulatory filing, said Andrew M Calamari, a partner at the law firm Finn Dixon & Herling and former director of the New York office of the Securities and Exchange Commission, the US market regulator.
"Just in terms of the style of this, it strikes me as very irregular," Mr Calamari said.
"It also raises questions about his intent," he added. "Was he in earnest in what he's saying, or does he have some other motive" like influencing the stock price.
Tesla shares reached a peak of $368 after Mr Musk's tweets on Tuesday, before trading on the stock market was halted.
Trades resumed later that afternoon, after the company published an email from Mr Musk to employees elaborating on the plans.
Tesla shares surged close to their all-time high of $385, which they touched almost a year ago, but fluctuated on Wednesday after the board members issued their statement.
'Wild swings'
In the staff memo, Mr Musk explained why he wanted to take the company private.
"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," he wrote.
"Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long term," he wrote.
He added that the company was "the most shorted stock in the history of the stock market" - a trading strategy which assumes share prices will fall - so "being public means that there are large numbers of people who have the incentive to attack the company".
Those traders are likely to have lost money when the share price rose on the announcement about a delisting.
Questions continue
Mr Musk already owns 20% of the company. He said his intention in taking the company private was not to increase his personal holding and his plan would give existing investors the option to retain their shares.
Regulators are likely to be interested in what evidence exists - such as agreements with investors or banks - for Mr Musk's claim that funding was "secured", Mr Calamari said.
The structure of the deal also remains ambiguous, said Adam C Pritchard, professor of securities law at the University of Michigan.
If more than 2,000 investors opt to retain their shares, then the firm would be subject to the disclosure rules of a public company, he added.
"Intuitively it doesn't make sense because it would still be a public entity, and the public entity status is what is apparently objectionable to Musk," Mr Pritchard said.
Steven Kaplan, a University of Chicago professor who researches private equity, said it would be difficult for Mr Musk to raise the necessary finance when Tesla has still not made a profit.
"The company is cash-flow negative. How do you use any debt on a company that is cash-flow negative?" he said.
A long-time Tesla shareholder with a $572 million stake says he's okay with the electric car maker going private.
Ron Baron, the founder of Baron Capital, told CNBC's Becky Quick on Tuesday that there's "no way" he would sell his Tesla shares at Elon Musk's suggested $420 a share price, saying he'd stay on as a private partner. Musk, Tesla's founder and CEO, set the market on fire on Tuesday when he tweeted he was considering a take-private at that price and had lined up financing.
Tesla shares rose more than 11 percent and were also slightly higher in aftermarket trading.
Baron Capital, which has $29.38 billion of assets under management, has 1.6 million shares of Tesla. A $420 per-share price would get him another $100 million on his stake. In the past he has told CNBC Tesla has the potential to make Baron 20 times its money.
He told Quick Tuesday he believes the firm has a bright future. Musk told employees in an email on Tuesday that he thought going private would be a good idea, eliminating the distractions of quarterly earnings and daily stock volatility and the negativity of short sellers betting against the stock.
Musk's only mention of the financing aspect to a take-private, which would need billions of dollars to pull off, was in one tweet on Tuesday. The note to employees didn't mention it and Baron told Quick he hasn't discussed it with the company.
WATCH:
Tesla shares jumped as high as $387.46 on Tuesday, before giving back gains, following some surprising tweets from CEO Elon Musk in which he announced that he's thinking of taking the company private. "Am considering taking Tesla private at $420. Funding secured," he wrote.
Tesla initially went public in 2010 and currently has a market value of $61 billion. At a share price of $420, the company would be worth around $71.6 billion.
If you had invested in Tesla in 2010, when it made its initial public offering, that investment would certainly have paid off: Tesla stock is currently more than 2,000 percent higher than its IPO price of $17. That means a $1,000 investment in the company then would be worth $22,327 as of August 7, 2018, according to CNBC calculations, or more than 21 times as much.
Despite Tesla's progress, any individual stock can over- or under-perform and past returns do not predict future results.
In response to his first tweet, Musk said that he will ensure the prosperity of shareholders "in any scenario." If Tesla went private, current investors could keep their stakes in Tesla through a special fund, or sell their shares at $420, he said.
Musk later shared a blog post on Tesla's website detailing his rationale for taking the company private, although the letter also says "a final decision has not yet been made." The post makes no mention of the funding Musk said he had secured in his original tweet.
Going private would remove the public spotlight from the company, which has been burning through cash and struggling to meet production targets, according to CNBC's Robert Ferris. As a public company, Tesla is beholden to shareholders and required to report quarterly earnings, which Musk said puts "enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term."
The decision is ultimately up to shareholders, Musk said. "Investor support is confirmed," he wrote on Twitter. "Only reason why this is not certain is that it's contingent on a shareholder vote."
If you're considering investing in Tesla or in the stock market in general, experts advise starting slow. Experienced investors Warren Buffett, Mark Cuban and Tony Robbins suggest beginning with index funds, which hold every stock in an index, offer low turnover rates, attendant fees and tax bills, and fluctuate with the market to eliminate the risk of picking individual stocks.
This is an updated version of a previously published article .
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A Tesla spokeswoman declined to comment.
Perhaps Mr. Musk could find himself some wiggle room over what he meant by “secured,” even if it turns out that he does not have the requisite tens of billions of dollars in takeover financing already lined up. (Some banks and large investment funds indicated on Tuesday that they had not been in talks with him.)
Even at a time when Twitter is the preferred medium for presidential communiqués, this is no way to commence a takeover bid. “It’s crazy,” Professor Coates said. “If I assigned this scenario to my students, the list of legal issues would fill many pages.”
For one thing, it is doubtful that a private Twitter account provides adequate notice for a public announcement of a $72 billion deal that is likely to move a stock’s price. (By the end of the day, Tesla shares had shot up over 10 percent.)
In 2013, the Securities and Exchange Commission ruled, in a case involving the Netflix founder Reed Hastings, that companies can announce important news via social media as long as they have previously told investors they might do so, and simultaneously announce that news to the broader public.
Mr. Hastings was not sanctioned for the relatively innocuous remark at issue in the matter: that Netflix subscribers had surpassed a viewing milestone of one billion hours. That’s a far cry from Mr. Musk’s announcing what would be the largest private buyout offer ever, one that could very well run afoul of the commission’s guidance. (Tesla did say in a 2013 S.E.C. filing that it might use social media to make material information public.)
