After Tesla Buyout Tweet, Some Investors Wonder: Where Was Nasdaq?

Devin Lawrence
August 13, 2018

Short-sellers borrow shares they believe are overpriced, sell them, and then repurchase shares later at what they hope will be a lower price to make a profit.

Mr. Musk tweeted at 12:48 p.m. ET on Tuesday that he had "financing secured" for a buyout of Tesla at $420 a share, a 16% premium to the share price at the time.

The stock has since given back more than two-thirds of that gain, in part following reports that the U.S. Securities and Exchange Commission had begun inquiring about Musk's activity.

Musk, often the center of controversy, did not prove he had the funds to finance the operation - despite tweeting "funding secured".

"I have not seen significant short covering in Tesla since Elon Musk's tweets", Dusaniwsky told Benzinga.

Well, Tesla is now a publicly traded company and Mr. Musk doesn't like this because being public, as he puts it, "subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term". The stock is up 13.3 percent in 2018, and Dusaniwsky said short sellers are down $2.21 billion on the year.

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Musk has done little to hide his disdain toward financial speculators, whom he regularly mocks on his Twitter account. A Musk investigation might be a best-case scenario for Tesla shorts, but CNBC's Jim Cramer said an investigation is a longshot. "What are your fav short shorts?"

The complaint alleges violations of American securities law and was filed on Friday as a class action in federal court in San Francisco.

"It's hard for me to think that these blasts are going to get him in trouble", Cox said.

The 47-year-old investor and engineer stunned financial markets on Tuesday when he said on Twitter that he was considering a take-private deal for Tesla, an auto manufacturing pioneer that developed the world's first luxury all-electric sedan vehicle.

The complaint filed by Kalman Isaacs said Musk's alleged false and misleading tweets on August 7 about a possible going-private transaction, and Tesla's failure to correct them, were a "nuclear attack" on short-sellers that inflated Tesla's stock price and violated federal securities laws.

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