Shares were down 6 percent to $347.26 in midday trading Thursday.
The strong rebuke from the board hinted strongly that the idea of taking Tesla private at $420 a share would be engineered by Musk - and not by the board.
For years, SpaceX has run an internal stock market for employees and other shareholders who have had the opportunity to buy or sell roughly every six months. All the same, Tesla has stated its intention to be far more than a auto company and that unnerves the public markets with questions of what, when and how.
The anonymous sources said Tesla's board is likely to develop a special committee made up of a smaller number of independent directors to review buyout details. "Funding secured", Musk tweeted, without elaboration or any corroboration from the company.
Tesla didn't respond to requests for comment Wednesday. If the money he claimed to have doesn't follow as Tesla's privatization takes shape, he might face civil or criminal charges for manipulating Tesla stock price by spreading misleading information to investors.
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 vehicle company that it is today. "And, if you stay as a shareholder, you have less information than before and you are depending more and more on Elon Musk".
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Nearly everything about the deal is outlandish, from Musk's out-of-the-blue disclosure in a nine-word tweet to the assertion that he has lined up adequate financing to a buy a company that seems to burn through cash faster than it produces cars.
Musk has long battled publicly with short sellers of the stock. Musk said via Twitter on Tuesday that the deal was contingent on a shareholder vote but that "investor support is confirmed".
"Basically, 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", Musk wrote in the letter.
Tesla is up almost 13% this year.
Some on Wall Street shared that view.
Musk has been under intense pressure this year to turn his money-losing, debt-laden company into a profitable higher-volume manufacturer, a prospect that has sent Tesla's valuation higher than that of GM.
I don't tweet often and, for the life of me, I don't understand why serious people, in the most consequential positions, choose Twitter as their medium to communicate breaking news. He also emphasised on removal of the quarterly system cycle by taking tesla into private company since this quarter cycle could affect tesla's decision making between any of the quarters.