Date
17 October 2018
Elon Musk sent Tesla short-sellers scurrying for cover with his words and tweets this month. Photo: Reuters
Elon Musk sent Tesla short-sellers scurrying for cover with his words and tweets this month. Photo: Reuters

Elon Musk and Tesla: Tweet, rattle and roll

Tesla founder Elon Musk posted a tweet on Tuesday that read: “Am considering taking Tesla private at $420. Funding secured.” That tweet sent shares of the electric carmaker up 4 percent within one minute.

In a follow-up tweet, Musk wrote: “I don’t have a controlling vote now and wouldn’t expect any shareholder to have one if we go private. I won’t be selling in either scenario.”

He said taking Tesla private would help the company operate better, “free from as much distraction and short-term thinking as possible.”

If the plans come to fruition, Tesla will set up a special investment fund to enable existing minority shareholders to hold their shares after privatization.

Tesla shares were suspended from trading for 90 minutes, during which the firm announced in a regulatory filing that the company is indeed looking at such privatization possibility although no decision has been made.

Interestingly, the shares resumed trading 15 minutes before market close and share price soared further.

In fact, before Musk’s tweet, the Financial Times had reported that Saudi Arabia’s public investment fund had quietly built up a stake of between 3 percent and 5 percent in the company. The share price jumped 3 percent immediately after the news.

That means within six hours on Tuesday, Tesla share price surged 11 percent on a series of sensitive news.

Tesla has already spiked 27 percent within one week after the firm’s quarterly report earlier this month. During the earnings call, Musk apologized to analysts for his rude behavior toward them in the past.

The stock spike after the earnings call led to Tesla short-sellers getting burnt by over US$2 billion.

Some are speculating the recent moves could all be part of a Musk plot to punish the short-sellers.

This article appeared in the Hong Kong Economic Journal on Aug 9

Translation by Julie Zhu

[Chinese version 中文版]

– Contact us at [email protected]

RC

Hong Kong Economic Journal columnist

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