Elon Musk, billionaire founder of Tesla, startled the Twittersphere yesterday by announcing he wanted to take the company private at the price of $420 per share. While some speculated the tweet was a joke or a marijuana reference, others took to the market. The tweet sent the stock soaring up 11 percent, causing a halt in trade for a portion of the day.
Now, the Securities and Exchange Commission is looking into the matter.
Wall Street Journal sources say the SEC has since made inquiries to Tesla to find out whether Musk’s tweet was truthful and why he chose to announce such a move on Twitter instead of through a regulatory filing. Musk could be held legally liable if regulators determine he was intentionally trying to boost the stock price with his tweet.
Musk later explained in a letter to employees going private was “the best path forward” as it would shield the company from “wild swings in our stock price that can be a major distraction” and relieve pressure from quarterly earnings cycles that aren’t necessarily in the best long-term interest of the company. We’ve reached out to the SEC and Tesla for more information on the matter.
Musk also indicated in the tweet he’d secured funding for the surprising move, though it’s unclear where the funding would be coming from at this time as he has yet to disclose those details. The tweet appeared shortly after news broke that a Saudi Arabian sovereign wealth fund bought a $2 billion stake in Tesla and, according to the WSJ, Musk spoke with a group of Tesla’s board members last week about taking the company private.