If Saudi Arabia's Public Investment Fund decides to support Tesla's plans to go private, it could be painful for small shareholders, according to Ross Gerber, president and chief executive officer of Gerber Kawasaki, a wealth and investment management firm, told Real Money.

His firm manages $850 million in assets, including holdings in Tesla (TSLA) , Amazon (AMZN) and Netflix (NFLX) .

"I represent a lot of small investors at Tesla, and they will end up having to end up selling their small holdings," Gerber said. "For Saudi Arabia, raising its 5% stake gives Saudi Arabia a lot of influence in the future of technology. It would be a coup for Saudi Arabia to take an American innovative gem under its wing."

By contrast, Musk has been largely positive on the proposed deal, stating on his blog that the deal "could be in Tesla's long-term interest."

Musk explained the he has been meeting with the managing director of the $250 billion Saudi Public Investment Fund for years, leading to his attention-grabbing "funding secured" tweet.

He further extolled the virtue of his decision to tweet the status of the negotiations as a way to inform all investors, including smaller ones.

"The only way I could have meaningful discussions with our largest shareholders was to be completely forthcoming with them about my desire to take the company private," he said. "However, it wouldn't be right to share information about going private with just our largest investors without sharing the same information with all investors at the same time."

However, Musk's tweets have since been complicated by a Reuters report that states the Saudi PIF has no interest in the deal.

The report cites sources close to the situation as indicating that the PIF would not give approval to any deal without consulting Japanese banking giant SoftBank.

The Reuters report states that sources independent from the Saudi sources said SoftBank would not pursue the Tesla deal due to their previous investment in Tesla's direct competitor GM Cruise (GM) .