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

Roman Schwartz
August 8, 2018

That said, if they do want out, they can sell their shares at $420 per share, which is a fair bit higher than Tesla's current stock price ($382.67 at the time of writing, up from today's open price of $343.84).

"Am considering taking Tesla private at $420".

Musk did not elaborate how he had secured the funding that he had mentioned in his tweet - or which lender was leading the effort. He later tweeted that the only uncertainty about completing the deal is whether he can gain shareholder approval. "Funding secured", Musk said.

No stranger to controversy, Musk last month apologized for calling British caver Vernon Unsworth, who helped rescue 12 Thai boys from a cave a "pedo", short for pedophile, after Unsworth spoke dismissively of the Tesla chief's proposal for bringing the boys to safety.

And since his tweet, he's elaborated on the idea and shared a blog post explaining that he's quite serious.

Around 4AM AEST on Wednesday, trading of Tesla shares was halted for "pending news".

Betting against Elon Musk has never been for the faint of heart. "This is not how you do it and it makes you wonder how seriously to take it", said Erik Gordon, a business and law professor at the University of MI. He says the move could be structured so that so that all shareholders will have a choice to remain investors in the private company or sell their stock for $420 (£324.58 / €362.11) per share.

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Tesla did not immediately confirm if Musk himself sent the tweet or if it was the result of a hack. It climbed again at 11 per cent to $US379.57 ($A511.55).

Technology dynamo Elon Musk announced Tuesday that he may take Tesla private, sending the Internet into a spiral of speculation about whether he was actually legit. He indicated that taking the company private would allow Tesla to focus on long-term ambitions and remove "perverse incentives for people to try to harm what we're all trying to achieve".

Tesla has burned through cash while struggling to produce the Model 3, its lowest-priced electric auto. Tesla lost another $717.5 million in its most recent quarter.

Taking Tesla's shares out of public markets would make it much more hard for people to engage in short selling of Tesla's stock.

The tweet spurred a rush of trading in Tesla's options, driving volume to 500,000 contracts, more than twice the daily average, according to options analytics firm Trade Alert.

Musk laid out his rationale: As a public company, Tesla is subject to "wild swings" in its stock price that serve as "a major distraction". And if the information in the tweet isn't true, Musk could be looking at some stock price manipulation allegations.

This was despite the Federal Election Commission releasing annual filings this week showing Musk as one of the top 50 donors. Before Musk's tweet, Tesla had a market value of $58 billion, already higher than that of General Motors or Ford, even though those companies are significantly larger and more profitable.

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