Photo: Yahoo Finance/National Geographic/edited by autoevolution
On August 7, 2018, Elon Musk tweeted that he considered taking Tesla private. He claimed he would pay $420 per share and had the funds to do that were secured. This tweet led to a settlement with SEC that Musk is now disputing by claiming he indeed had the money to do that. A federal judge ruled his tweet was “false and misleading.”
The decision was made on a lawsuit Tesla investors have against Elon Musk seeking damages from his disastrous tweet. While the trial by jury is set to happen in May, this decision already shows Musk will have a hard time escaping a negative outcome.
When he mentioned the price he was willing to pay for each share, it immediately struck some people as a bad joke. Musk frequently brings up the numbers 69 (a reference to the sexual position) and 420 (April 20, a celebration day for smoking cannabis) in his tweets. He priced the Tesla Short Shorts at $69,420 and also joked the Model S would cost $69,420 in October 2020.
The problem is that joking about the stock market has massive implications, especially if you run a company you are tweeting about and have millions of followers on Twitter. People may take you seriously, and that can affect the stock price. On August 7, 2018, a Tesla share was worth $68.77 when the market opened and closed at $75.91. The perspective of selling it at $420 must have sounded extremely attractive.
In a recent TED interview, Musk said he was serious about taking Tesla private and that he had the funds to do so. According to Reuters, Judge Edward Chen did not think that was the case, hence his ruling. The filing also stated that the court “held that he recklessly made the statements with knowledge as to their falsity.”
Ironically, Musk also said that he was forced to settle with SEC because Tesla would go “bankrupt immediately” if he did not do so. That makes the “funding secured” claim even less credible. At the time, the Tesla CEO said Saudi Arabia’s PIF (Public Investment Fund) would provide the money for the operation, something sources close to the fund denied to Reuters.
When he mentioned the price he was willing to pay for each share, it immediately struck some people as a bad joke. Musk frequently brings up the numbers 69 (a reference to the sexual position) and 420 (April 20, a celebration day for smoking cannabis) in his tweets. He priced the Tesla Short Shorts at $69,420 and also joked the Model S would cost $69,420 in October 2020.
The problem is that joking about the stock market has massive implications, especially if you run a company you are tweeting about and have millions of followers on Twitter. People may take you seriously, and that can affect the stock price. On August 7, 2018, a Tesla share was worth $68.77 when the market opened and closed at $75.91. The perspective of selling it at $420 must have sounded extremely attractive.
In a recent TED interview, Musk said he was serious about taking Tesla private and that he had the funds to do so. According to Reuters, Judge Edward Chen did not think that was the case, hence his ruling. The filing also stated that the court “held that he recklessly made the statements with knowledge as to their falsity.”
Ironically, Musk also said that he was forced to settle with SEC because Tesla would go “bankrupt immediately” if he did not do so. That makes the “funding secured” claim even less credible. At the time, the Tesla CEO said Saudi Arabia’s PIF (Public Investment Fund) would provide the money for the operation, something sources close to the fund denied to Reuters.
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