Tesla CEO Musk accused of defrauding shareholders, sued by investors

Elon Musk’s Tesla tweets are no longer scaring short sellers

Taking Tesla private would remove the pressure from Musk coming from hedge funds betting that the company's stock will drop given its production issues and negative cash flow.

Short-sellers make a profit by borrowing overpriced shares, selling them and then buying them back at what they hope will be a lower price.

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.

However, a source who is familiar with PIF's strategy said it was not now getting involved in any funding process for Tesla's take-private deal. The Securities and Exchange Commission is investigating Musk's disclosure of the potential deal, according to reports earlier this week. Musk's tweet about taking Tesla private sent the stock soaring 11 percent Tuesday and cost short sellers roughly $1 billion, according to some estimates. "Anybody who purchased the stock on that news, if the news was in fact misleading, could have a claim, however, it would be very short class period".

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Late Friday Musk mocked short investors in a series of tweets, suggesting his antipathy toward them hasn't dimmed. Musk and SoftBank Group's Masayoshi Son held talks past year that touched on taking Tesla private, two people with knowledge of the discussions have said. "What are your fav short shorts?"

"It's hard for me to think that these blasts are going to get him in trouble", Cox said.

The complaint filed by Kalman Isaacs said Musk's alleged false and misleading tweets on August 7 about a possible going-private transaction, and Tesla's failure to correct them, were a "nuclear attack" on short-sellers that inflated Tesla's stock price and violated federal securities laws.

The 47-year-old investor and engineer stunned financial markets on Tuesday when he said on Twitter that he was considering a take-private deal for Tesla, an auto manufacturing pioneer that developed the world's first luxury all-electric sedan vehicle. Others, however, stayed silent as they have yet to see more detailed financial evidence from Musk.

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