Elon Musk Sued by Tesla Investors Over Short-Selling Claims

Elon Musk Sued by Tesla Investors

Last week, Tesla CEO Elon Musk made quite a bold statement on Twitter. In just 9 words, he announced his plans to buy-out investors shares and (with the help of some friends) take Tesla as an entirely private company. It was an announcement that no one expected and led to a lot of dramatic shifts in the company share price.

In a report via SkyNews though, some of the Tesla investors are planning to sue Elon Musk for what they feel was a cynical move purely to disrupt the short-sellers on the stock market.

Short-Selling

Short-selling is effective when investors use the stock market to ‘bet’ on a company losing value. The concept is based on the person ‘borrowing’ shares in a company. They sell these borrowed shared at the current price expecting them to drop. When the price does drop, they purchase them again and reap whatever benefit there is.

As above, it’s essentially taking a gamble that a company is set to lose quite a significant amount of value. Many investors in Tesla feel that Elon Musk deliberately made this announcement with the sole intention of disrupting this market.

Is It True?

The short answer is that it’s hard to say. Several board members confirmed that Elon Musk had been in contact regarding the deal prior to the announcement. Then again, nearly every legal consultant has said that Elon Musk’s announcement was, at the very least, exceptionally ill-advised.

Given his behaviour in the past, it’s entirely possible that both are true. He may well want to take Tesla private. I wouldn’t, however, put it past him to also want to troll those betting against the company.

What do you think? Was this Elon Musk being honest or a little mischievous again? – Let us know in the comments!