The bombastic announcement by Tesla founder and CEO Elon Musk that he is considering delisting the shares of the electric vehicle manufacturer from the stock market has resulted in a lawsuit from investors who lost millions of dollars as a result.
Musk stated last week that he is contemplating the delisting of Tesla, deeming it the “best path forward” for the company.
He first announced this on Twitter, rather than through official regulatory channels for disclosing market-sensitive news.
He also stated that investors support this plan, which requires a vote from shareholders. He added that shareholders would be offered $420 per share – a fifth higher than the current price.
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If realized, it would be one of the largest such transactions in history, valued at $72 billion.
As a result, Tesla’s stock price surged by 11 percent that day, reaching nearly $380.
Although the stock price fell in the following days, some investors, who had previously ‘bet’ on a decline in Tesla’s stock price, accuse Musk of misleading the market.
They claim that Musk, in discussing the delisting price of $420 per share, did not accurately specify where the funds for this transaction would come from and that they lost millions of dollars due to his announcements.
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Among other things, they accuse Musk and Tesla of violating federal securities laws and artificially inflating Tesla’s stock price.
Elon Musk, who owns a fifth of the company, has previously complained about “negative propaganda” from some investors and analysts who ‘bet’ on the company’s failure.
He also stated that he hopes that delisting Tesla’s shares would protect the company from significant stock price fluctuations and pressures to meet quarterly financial goals and make short-term decisions to appease investors.
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Neither Musk nor Tesla wished to comment on the lawsuit filed in the Federal Court in San Francisco.
