Tesla shares rose 11 percent Tuesday, meaning short sellers lost about $1.3 billion in mark-to-market losses, according to estimates from Ihor Dusaniwsky, S3's head of predictive analytics. Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.
Trading of Tesla sharesresumed after the company published the statement and the stock closed at $379.57, up almost 11 percent for the day.
Musk's tweet came nearly simultaneously with a new report from the Financial Times that revealed for the first time that Saudi Arabia's Public Investment Fund has been quietly buying up about five per cent of the electric auto company over the last few months to the tune of $US2 billion ($2.7 billion). He cited SpaceX as an example and said it is "far more operationally efficient" because it is a private company.
The broader timing of the tweet is also suspect, given Musk's recent public denunciations of Tesla's (equally vocal) critics.
The bombshell proposal to take the electric vehicle maker private prompted regulators to take the unusual step early Tuesday afternoon of suspending trading in the company's stock. He would still allow employees to keep their shares unless they want to jettison theirs at Musk's $420 price, which he noted was 20 percent higher than the stock was as of the Q2 earnings call.
Even before the take-private tweet, Tuesday was shaping up as an interesting day for Tesla.
It contained a letter from Musk sent to Tesla employees. In follow-up tweets, Musk said shareholders could either sell at $420 or hold their shares and go private, adding that he was super appreciative of Tesla shareholders and would ensure their prosperity in any scenario.
Musk has long regretted the need to take Tesla public in 2010, and now he appears to be poised to do something about it.
Musk's tweet comes as Tesla faces continued pressure to ramp up output of the Model 3 sedan, its first effort at the middle market.
Going private is one way to avoid the intense scrutiny of public markets. "Funding secured", Musk tweeted at 12:47 p.m. - with Tesla shares trading hands at about $356.67.
But asked if he would take legal action against Musk over the allegation, Unsworth said: 'If it's what I think it is yes'. With $2.2 billion in cash on hand at the end of the second quarter, Tesla would have enough to operate until the end of the year.
George Galliers, analyst at Evercore ISI said he believed the tweet was serious.
"Given his historic frustration with short sellers, analysts and certain parts of the press, it is perhaps also not surprising that he has given consideration to taking the company private".
"Details, structure, participants and how the valuation has been determined remain to be seen".