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


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

Andrew Cummings
August 12, 2018

Tesla CEO Elon Musk used Twitter late Friday to taunt investors who have bet against his company, even though his previous Twitter comments have spurred a government investigation and shareholder lawsuits.

Tesla Inc. (TSLA.O) and Elon Musk were sued by an investor over wild share price swings following the chief executive officer's August 7 tweet saying he was considering taking the company private.

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.


The Twitter comments could potentially affect Musk's legal situation.

The decision to go private is mostly, based, Musk says, on the fact that his other company, SpaceX, is privately held and is operated more efficiently than Tesla, as it isn't subject to the ups and downs of the stock market.

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's attitude toward short sellers could be relevant, securities law experts have said. Another, filed by William Chamberlain, seeks class action for those who bought or sold Tesla stock between August 7 and 10. "What are your fav short shorts?"

One lawsuit, filed by Tesla investor Kalman Isaacs, said Musk's tweets amounted to a "nuclear attack" on short-sellers, created to "completely decimate" them for not believing in Tesla's stock to date.

James Cox, a professor of securities law at Duke University, downplayed the significance of the Friday tweets, noting that Musk's antipathy toward short sellers is well-known.


As a result, Tesla shares jumped 11 percent, causing so-called short-sellers who have been betting on the stock crashing for years to lose millions. If there is evidence that the financing wasn't fully locked down, Musk's claim would expose him to allegations of fraud, Coffee said.

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