Last week, Tesla CEO Elon Musk sent a tweet literally read around the world. Musk tweeted he was considering taking Tesla private and that funding had been secured. Not everyone was happy about the news, particularly short sellers, who think the move was made simply to burn them. Now, The Wall Street Journal says an SEC probe is looking into whether Musk was being truthful in his tweets.
This is not good news for Tesla. But, it’s been through worse.
It gets even more interesting. As we reported last week, sources indicated Saudi Arabia’s sovereign wealth fund was interested in dropping $2 billion on the electric automaker. That was contradicted by a report from Reuters, which said no such buyout funding was even under consideration. The fund does have just shy of a 5 percent share in Tesla, but a $45 billion investment in SoftBank Group Corp. makes things complicated.
The Saudis apparently would consult with SoftBank before making such a move, according to Reuter’s source. If you don’t know, SoftBank is heavily invested in GM’s Cruise venture, which is a direct competitor to Tesla.
So, it now comes down to this question: Did Elon Musk seek to mislead investors? If so, he could face some stiff penalties from the SEC and Justice Department. This is why discussing this kind of information flippantly on Twitter probably isn’t a great strategy.