Elon Musk's tweet about going private costs Tesla short sellers $1.3 billion

  • Elon Musk's tweet about going private costs Tesla short sellers $1.3 billion

Elon Musk's tweet about going private costs Tesla short sellers $1.3 billion

"The short position is the best thing the stock has going for it. "Musk vs The Shorts" is a far better narrative than 'Tesla vs Mercedes/Audi/Porsche, '" Chanos said.

In a Bloomberg report following the tweet, the publication quoted Musk as having said in 2015, "There's a lot of noise that surrounds a public company and people are constantly commenting on the share price and value.Being public definitely increases the management overhead for any given enterprise".

Musk's tweets, though, might present a bigger problem. It's not uncommon for trading in a stock to be halted in the wake of unexpected or unsettling news.

Tesla spokespeople have not yet confirmed the proposal to any media outlets.

Shares finished up 11 per cent at US$379.57 after being suspended for about 90 minutes following a series of Musk statements on Twitter in which he initially floated the idea of going private. "There is a 1 in 3 chance he can actually pull this off and bring Tesla private", said Munster, adding that even at a market capitalization based on a $420 share price, it "may not be high enough to incentivize existing shareholders to support the sale". The company had a market value of $58 billion as of Monday's close.

The broader timing of the tweet is also suspect, given Musk's recent public denunciations of Tesla's (equally vocal) critics. The stock had been worth about $342 a share before Musk's tweet, and shares quickly jumped as high as $371.

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Musk has a history of erratic tweeting, prompting some initial scepticism about whether the Tesla plan was serious. "Would create special objective fund enabling anyone to stay with Tesla".

Chinese internet company Tencent took a stake in Tesla through stock market purchases early a year ago, paying out about $1.7 B to amass its position. He shared in a tweet that the move would insulate the company from some of the distractions that come with being a publicly traded company. The CEO apologized to those analysts during the second quarter call.

Short interest in Tesla on Monday stood at almost $12 billion United States, equivalent to 28 per cent of its float, according to S3 Partners, a financial analytics firm.

"I can't believe this is something to bluff or make fun of".

"Details, structure, participants and how the valuation has been determined remain to be seen".

Separately, Financial Times reported on Tuesday Saudi Arabia's sovereign wealth fund, overseen by Crown Prince Mohammed bin Salman, has built an undisclosed stake of between 3 and 5 percent stake in Tesla.

The company's stock price jumped from US$342.54 ($460.76) prior to the announcement to US$379.57 ($510.60) at the day's close, a rise of nearly 11 per cent, but still significantly short of the proposed buy back price.