S3 Partners: Tesla Shorts Haven't Gone Anywhere (NASDAQ:TSLA)

Einhorn gets box of ‘short shorts’ after sparring with Elon Musk

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Investment bankers and Wall Street automotive sector analysts have so far reacted with skepticism saying it would be hard for Mr. Musk, whose net worth is pegged by Forbes at $22-B, to raise the equity and debt financing needed for the deal given Tesla is not turning a profit.

Tesla's (NASDAQ:TSLA) board has not yet received a detailed financing plan from CEO Elon Musk and is seeking more information about how he would take the company private, Reuters reports.

The investors had no choice but to file a case against the company after Elon Musk posted a tweet on Tuesday to announce that he going to take Tesla private.

In one of the lawsuits, the plaintiff Kalman Isaacs said Musk's tweets were false and misleading, and together with Tesla's failure to correct them amounted to a "nuclear attack" created to "completely decimate" short-sellers.

The lawsuit alleges that Tesla and Musk violated the Securities Exchange Act of 1934 in sending the tweet by making allegedly false and misleading statements to defraud Tesla investors.

August 1, 2018 - Tesla reports its biggest-ever loss but shares rise on Musk's claims of positive cash flow and profit in the second half of 2018, and signs of more consistent Model 3 production.

Musk's tweet stunned investors, with many raising questions about his claim that funding for the venture had been secured.

The PIF didn't immediately respond to requests to comment. The total cost is about $72 billion. Musk and SoftBank Group's Masayoshi Son held talks a year ago that touched on taking Tesla private, two people with knowledge of the discussions have said.

"'Funding secured' is a very strong term, and it has legal consequences", Pitt said.

In the days following Musk's tweet, however, Wall Street demonstrated some major skepticism about Musk's claims, and Tesla's massive hoard of short sellers appear to be dismissing them all together.

"Musk has every right to say that he has a potential $420-per-share takeover bid lined up, provided that he doesn't sell stock into the hype", Cramer said this week.

"We wonder whether surge production techniques to support self-congratulatory tweets are economically efficient ways of ramping production, or whether customers will be happy with the quality of a vehicle rush through production to prove a point to short sellers", the letter said.

To determine Musk's intent with his tweets on Tuesday, the SEC would look at his internal communications before and around the time he sent the first tweet, Pitt said.

He could also seek funding from sovereign wealth funds such as Saudi Arabia's, which has just taken a stake in Tesla estimated at between three percent and five percent.

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