Tesla tweet 'highly problematic,' says former SEC boss

Tesla CEO Elon Musk has offered no evidence to back up a tweet stating he had “funding secured” to take the company private.
David Paul Morris  Bloomberg

Doubts have mounted about Musk's ability to take the electric-car maker off the market, sending the stock tumbling 4.8 percent to $352.45 on Thursday, well off the $420 at which Musk said shareholders would be bought out. Tesla's share price jumped on that news.

The Wall Street Journal reported Wednesday that regulators are asking whether Musk's tweet "was truthful". At the same time, Musk's behavior could easily be framed as illicit stock market manipulation.

According to Probes Reporter, a research firm focusing on undisclosed SEC investigations, the SEC investigated Tesla from June 2016 to May 2017 regarding the Model 3 sedan.

"It's very clear that he doesn't like to deal with being a CEO of a public company", said Gene Munster, a former stock market analyst who is now managing partner of investment fund Loup Ventures. "Funding secured", Musk said on Tuesday via Twitter before issuing a formal statement on Tesla's website.

As for Tesla shareholders, Musk said in one of his Twitter posts that "investor support is confirmed" for his plan. The agency had been looking into Tesla's public statements on production numbers and sales targets, the news site reported, and intensified its scrutiny after Tuesday's tweet.

The move came after months of Mr Musk battling investors, journalists and analysts over whether Tesla could turn a profit and produce enough of the mass market model of is flagship electric vehicle to meet demand.

Given some of the outlandish remarks Elon Musk has a penchant for making on Twitter, it can sometimes be hard to discern when the Tesla CEO is being serious and when he's simply having a little bit of fun. The entrepreneur owns about 20% of Tesla, meaning there is a potential conflict of interest should he head talks to take the automaker private. Musk's bold claim that Tesla already has the funding in place to delist itself from the public glare of the stock exchange has yet to be verified.

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

"If you are a believer in Elon, I would continue to hold onto those shares", said Michael Jurasic, a securities attorney at Ropes & Gray, who added that it's unclear exactly how Tesla's buyout would work.

Tesla is up almost 13% this year.

Just last week, he revealed he had been working 110 hours a week to deliver on short-term promises he had made to Wall Street, a load he traced to his boorish behavior toward two analysts earlier this year.

Buying Tesla in its entirety would cost $72 billion, based on the company's outstanding stock as of July 27. He also emphasised on removal of the quarterly system cycle by taking tesla into private company since this quarter cycle could affect tesla's decision making between any of the quarters.

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