Elon Musk’s Tesla Claim Could Land Him in Regulatory Trouble

Musk went on to claim Tesla is the "most shorted stock in the history of the stock market" and this means there are "large numbers of people who have the incentive to attack the company".

On Aug. 7, 2018, Tesla co-founder and CEO Elon Musk tweeted gnomically: "Am considering taking Tesla private at $420". And if the information in the tweet isn't true, Musk could be looking at some stock price manipulation allegations.

Earlier today, I announced that I'm considering taking Tesla private at a price of $420/share.

In a blog post on Tesla's website, Mr. Musk said taking Tesla private, in what analysts expect could be the largest leveraged buyout in USA history, would allow the company to ignore the pressures of the stock market and focus on long-term plans.

At that price, the buyout would cost almost $US72 billion, based on Tesla's outstanding stock as of July 27, but it is unlikely the deal would cost that much because Mr Musk owns a roughly 20 per cent stake in the Palo Alto, California, company.

That came shortly before 3:30 p.m. when Tesla published an email that Musk sent to company employees, saying thatno final decision on taking the company private had been made and that it would ultimately be left to shareholders. On April Fool's Day, amid growing market concerns about Tesla's cash crunch, he had tweeted a fake news release that said Tesla would have to file for bankruptcy.

The company had a market value of US$58 billion as of Monday's close. The stock had been worth about $342 a share before Musk's tweet, and shares quickly jumped as high as $371.

The gains added to upward movement on the stock after The Financial Times reported earlier that a Saudi Arabian sovereign wealth fund had built a stake of between three and five per cent in the company.

And yet it also left many questions unanswered, namely how Musk - who owns nearly 20 percent of the company - would be able to come up with the $66 billion necessary to complete the transaction.

Shares finished up 11 per cent at US$379.57 after being suspended for about 90 minutes following a series of Musk statements on Twitter in which he initially floated the idea of going private. Why would Musk want to take his company private?

As a private company, Tesla would not be required to report quarterly results, freeing it from Wall Street pressure and giving the company a longer-term window to achieve Musk's goal of a renewable-energy future.

A spokesman for Tesla did not immediately return a request for comment.

Tesla has been publicly traded since 2010, and has seen its share price rise from just under $20 then to $360 at time of writing.

Musk's target for taking the company private would value it at more than $82 billion, according to Bloomberg.

(Copyright © 2015. All Rights Reserved.)
 
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