Investors sue Tesla's Musk over go-private tweets

14 August, 2018, 18:37 | Author: Shannon Aguilar
  • Tesla's board might not know where Elon's 'secure' funding is coming from

Chief Executive Elon Musk and team ring the Nasdaq opening bell as Tesla becomes the first auto company to go public in the United States since Ford Motor Co in 1956.

Saudi Arabia's Public Investment Fund (PIF) has shown no interest so far in financing Tesla Inc CEO Elon Musk's proposed $72bn deal to take the USA electric vehicle maker private, despite acquiring a minority stake in the company this year, two sources familiar with the matter said. In reaction to Musk's Tweet, the price of Tesla's stock soared to an intra-day high of $387.46, $45.47 above the previous day's closing price, closing at $379.57 per share.

June 21, 2016 - Tesla announces its plan to buy Solar City, a solar energy system company in which Musk holds a stake, for $2.9 billion. Isaacs is seeking approval to become the lead plaintiff in a class-action lawsuit representing all Tesla shareholders who traded after Musk's tweet on Tuesday or at any time on Wednesday. His personal stake in Tesla is nearly 20 per cent. This was the message given by Musk in his tweet, some three days earlier and what's more, he said the funds required to go through with that exercise, $72 billion, have also been tied up. The case is filed in Federal Court in San Francisco. Others, however, stayed silent as they have yet to see more detailed financial evidence from Musk.

The complaints allege Musk looked to mislead investors by claiming on Twitter that he secured funding to take Tesla private.

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Musk has been in public markets for long enough to know his tweets would impact on markets, Kathrein added.

Since rising sharply in the immediate aftermath of Musk's statement, Tesla stock has largely given back its gains, closing on Friday at $355.49.

Investment bankers and Wall Street automotive sector analysts have so far reacted with skepticism saying it would be hard for Mr. Musk, whose net worth is pegged by Forbes at $22-B, to raise the equity and debt financing needed for the deal given Tesla is not turning a profit.

Irons has a small position in out-of-the money put options on Tesla that make money if the stock declines. The action was filed in the Northern District of California and is captioned Kalman Isaacs v. Elon Musk, et al.

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