Elon Musk's tweet draws Tesla investor lawsuit over share price swing

Tesla's board might not know where Elon's 'secure' funding is coming from

An investor is suing Tesla and its founder over wild share price swings following Elon Musk's tweet claiming he was considering taking the company private.

Kalman Isaacs, one of the investors who filed suit Friday in a San Francisco court, claimed Musk's tweets were "designed to completely decimate short-sellers".

One lawsuit, filed by Tesla investor Kalman Isaacs, said Musk's tweets amounted to a "nuclear attack" on short-sellers, created to "completely decimate" them for not believing in Tesla's stock to date. Then it fell back, losing about 7 per cent over two days, as doubts mounted about the feasibility of the going-private idea - and about the chief executive officer's declaration that funding was already in place.

They have cited as evidence Musk's tweet that came on August 7 and the very next day, Tesla shares went up by around 13%.

Tesla CEO Elon Musk used Twitter late Friday to taunt investors who have bet against his company, even though his previous Twitter comments have spurred a government investigation and shareholder lawsuits.

When Elon Musk took to Twitter earlier this week and said he was considering taking the company private again, and that he had "secured" funding, that sounded pretty ironclad. The company is based in nearby Palo Alto, California.

The stock has since retreated, in part following reports that the U.S. Securities and Exchange Commission had begun inquiring about Musk's activity.

The class includes investors who bought Tesla shares as they were rising in the wake of Musk's tweet.

But Isaacs said Tesla's and Musk's conduct caused the volatility that cost short-sellers hundreds of millions of dollars from having to cover their short positions, and caused all Tesla securities purchasers to pay inflated prices.

The proposed class period in Isaacs' lawsuit runs from the afternoon of Aug. 7 through the next day, and in Chamberlain's lawsuit runs from Aug. 7 to Aug. 10.

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