Investors sue Tesla's Musk over go-private tweets

The Tesla logo is seen outside of their showroom in Washington DC.					Saul Loeb AFP  Getty Images

Tesla chief executive Elon Musk got into legal hot water this week after announcing on Twitter he had sufficient financing already in hand to take the electric automaker private.

Tesla did not respond to a request for comment on the proposed class-action complaint filed in the federal court in San Francisco.

Many in United States financial circles are wondering where he will he get all this money, and have turned skeptical despite the reverence in which they normally hold Musk, who founded the company in 2003 to transform cars into tech marvels.

Some analysts have suggested that Mr. Musk may be able to convince Tesla's top shareholders, such as Fidelity Investments and China's Tencent, to roll their equity stakes into the deal, thereby significantly reducing the amount of money needed to be raised. This was the message given by Musk in his tweet, some three days earlier and what's more, he said the funds required to go through with that exercise, $72 billion, have also been tied up.

Dusaniwsky said that, as of Thursday morning, Tesla remained the single most heavily shorted US equity with roughly $12.36 billion in total short interest.

Short-sellers aim to profit by selling borrowed shares, hoping to buy them back later at a lower price.

The comment by Elon Musk on Twitter on taking the company private alerted the Securities and Exchange Commission and the regulatory body is said to have initiated an inquiry into the issue. The case is going to be consolidated and presented in front of a single Judge to solve the matter soon.

"Shareholders could potentially be misled if the statement omits material information", attorney Joe Tabacco said. "It looks like the large short sellers are holding onto their positions", and increasing the positions at the stock's higher level, he said.

Musk has been in public markets for long enough to know his tweets would impact on markets, Kathrein added.

Musk has a history of setting aggressive sales targets that critics have called unrealistic.

In the letter, Einhorn questioned Tesla investors, saying shareholders seemed to be backing the long-term growth of the company while Tesla appears to be focusing on "very short-term goals".

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