Tesla stock drops closer to pre-Musk tweet level

August 9, 2018 by The Associated Press
Tesla stock drops back near pre-Musk tweet level
A Tesla emblem is seen on the back end of a Model S in the Tesla showroom in Santa Monica, Calif., on Wednesday, Aug. 8, 2018. Board members at Tesla are evaluating CEO and Chairman Elon Musk's $72 billion proposal to take the electric car and solar panel maker private. Six of nine members said in a prepared statement Wednesday that Musk began talking with the board about the move last week. (AP Photo/Richard Vogel)

After two days of turmoil, Tesla shares have fallen back closer to the level they were trading at before CEO Elon Musk tweeted Tuesday that he may take the company private.

Shares closed down 5 percent on Thursday.

That means they've now given back almost all the gains following Musk's Tuesday morning tweet that he had confirmed funding for taking the company private at $420 a share.

Prior to the tweet, shares closed Monday at $341.99. After two days of turmoil, they stood at $352.45.

The retreat from earlier highs suggests the market now doubts the buyout will happen.

The Securities and Exchange Commission has opened an inquiry into the wording and method of Musk's disclosure about the potential deal, according to a Wednesday report in The Wall Street Journal, which cited unidentified people familiar with the matter.

Musk has long battled publicly with short sellers of the stock. The jump in the stock price, however brief, may have punished some of them by causing them to cover their positions at a loss. Short sellers bet that a stock price will fall, specifically by borrowing shares and selling them immediately. They profit if they repurchase the shares at a lower price, but can face astronomical losses if the price rises instead.

Mark Spiegel, a portfolio manager whose Stanphyl Capital Partners has bet millions of dollars on Tesla shares falling, says the market turmoil likely lost money for both short-sellers and people betting on Tesla's upside.

"If the tweet was false, the liability could be in the billions of dollars," he said Thursday.

Musk said he was serious about the offer in an email to employees, and Tesla directors said in a statement Wednesday that they're evaluating it.

Explore further: Tesla boss Musk rattles Wall Street with tweet on going private (Update)

Related Stories

Tesla board weighs CEO's buyout bid as questions swirl

August 8, 2018

Board members at Tesla are evaluating CEO and Chairman Elon Musk's $72 billion proposal to take the electric car maker while government regulators look into whether the announcement of the potential deal meet legal requirements.

Tesla CEO's buyout bid raises eyebrows, legal concerns

August 9, 2018

Tesla CEO Elon Musk is seeking relief from the pressures of running a publicly held company with a $72 billion buyout of the electric car maker, but he may be acquiring new headaches with his peculiar handling of the proposed ...

Recommended for you

Pushing lithium ion batteries to the next performance level

December 13, 2018

Conventional lithium ion batteries, such as those widely used in smartphones and notebooks, have reached performance limits. Materials chemist Freddy Kleitz from the Faculty of Chemistry of the University of Vienna and international ...

Uber filed paperwork for IPO: report

December 8, 2018

Ride-share company Uber quietly filed paperwork this week for its initial public offering, the Wall Street Journal reported late Friday.

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.