After Musk’s surprising Friday night announcement to pull the Tesla deal, investors were not sure whether the stock would tumble (after Musk appeared to sabotage his own deal as we discussed last night), or rise as the bulls suggested, with upside no longer “capped” by the $420 take out price.

The answer was the letter, with RBC analyst Joseph Spak writing that Musk’s latest reversal on plans to go private – less than three weeks after he disclosed his intention to take the company private – was a hit to the carmaker’s credibility, while leaving the company open to “potential ramifications from an SEC investigation and shareholder lawsuits.” 

As a result, Tesla stock tumbled as much as 5% in pre-market trading, dropping from the mid-$320 to just above $300 which has emerged as a key support level for the stock. If the stock dips below $300, watch out below. The stock has traded as high as $387 and as low as $288 since Aug. 7 – the day Musk made his first going private announcement on Twitter – far short of the $420 a share cash-out price Musk had pitched.

“We expect shares to be under pressure in the near term as investors question the go-private process and the outcome of staying public,” Robert W. Baird analyst Ben Kallo wrote in a report.

According to RBC, the announcement that Tesla will remain public may embolden both bulls and bears on the stock, although sentiment that the “whole episode was not planned or fully thought out” leaves the bears better positioned on near-term trading, and the stock is currently reflecting just this outcome.

Spak also cautioned that potential legal concerns could become another weight on the company’s weak balance sheet and cash position.

The RBC analyst, who has a $315 price target on TSLA, sees investors demanding improved governance, and could push for a second-in-command with a strong operational background to help Musk moves from ideas to execution.

Then again, with Musk recently vowing that changing the way he works is “not an option”, even the smallest changes in the company’s operational profile will likely be an uphill battle.

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