Tesla shares were trading at $346.65, down about $10 from where they were before Musk's tweet on Tuesday sent the shares soaring to a near one-year high.
The news comes two days after Musk, Tesla's CEO, announced via Twitter that he's considering taking the company private at $420 per share.
Exactly 48 hours after Elon Musk triggered a frantic rally with a tweet saying he was considering taking Tesla Inc. private, the stock erased all of those gains.
The U.S. Securities and Exchange Commission has already contacted Tesla to ask about Musk's assertion on Twitter that funding for his proposed deal was "secured", the Wall Street Journal first reported on Wednesday.
In an email to employees that was later published on Tesla's website, Musk gave a few more details on the plan, leading with the fact that a final decision had not been made. At the same time, Musk's behavior could easily be framed as illicit stock market manipulation.
Once private, Tesla would have to continue filing public financial reports with the SEC if it has more than 300 shareholders.
"It's very clear that he doesn't like to deal with being a CEO of a public company", said Gene Munster, a former stock market analyst who is now managing partner of investment fund Loup Ventures.
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The chief executive officer raised the go-private possibility with the board last week, according to a statement from six of Tesla's nine directors.
The SEC declined to comment on Musk's Tuesday tweet and possible future actions against him or Tesla.
My reason for supporting a private Tesla is that, in my experience, there simply is no public market appetite for transformation and Elon has expressed a vision for Tesla that goes far beyond being the nascent mass-market alternative engine technology auto company that it is today. It is not clear if PIF is interested in financing Mr Musk's proposed take-private deal. Musk has feuded publicly with regulators, critics, short sellers and reporters, and some analysts suggested that less transparency would be welcomed by Musk.
"I'm trying to accomplish an outcome where Tesla can operate at its best, free from as much distraction and short-term thinking as possible, and where there is as little change for all of our investors, including all of our employees, as possible", he said. And if I learned one thing in my 13 years as a public company CEO, it is that a peer group comparable company analysis is the oxygen that mutual fund managers breathe.
In turn, an internal Tesla market could encourage smaller investors to hold onto their stock, lowering the amount of money, which could be tens of billions, that Musk must raise for the buyout. He said that Tesla had not received such a notice, and that he had no expectation of raising new equity.
Tesla needs cash for its $2 billion factory in China, to open more stores and to pay off the debt that's coming due in the next eight months.