We suppose that when the President of the United States can get away with spending his days on Twitter, posting up whatever thoughts are in his head at that particular minute with no apparent consequences (at least to himself), then it’s understandable that others would think they can do the same thing.
However, despite Elon Musk probably thinking he’s on the same omnipotent level as Donald Trump, the truth is that his tweets have a real impact - and he can get in plenty of trouble for them.
It’s a recurring theme for Musk, who was forced to backtrack last month after calling the Vernon Unsworth a ‘pedo’ when the hero British cave diver, who helped to rescue the trapped kids football team from a cave in Thailand, was less than impressed with the mini-submarine that he had provided for the rescue mission.
It’s as-yet-unknown whether Unsworth proceeded with legal action but experts believed he had a cast-iron case for libel against Musk.
However, Musk doesn’t seem to have learnt his lesson, with another idle tweet having unintended consequences.
On Tuesday afternoon, Musk tweeted: “Am considering taking Tesla private at $420. Funding secured.”
Naturally, the market, given an insight into the thoughts of the CEO of a multinational corporation, reacted almost instantly, with the share price jumping up. It was already on the move following the Financial Times’ report that Saudi Arabia’s sovereign wealth fund had taken a $2bn stake in the company, but Musk’s tweet jumpstarted it.
However, securities lawyers were said to be shocked by the tweet, with Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, saying “I do not believe this is the appropriate way to suggest going private.”
The sticky point for Musk is that the public believed his tweet - but lawyers warned that if the tweet wasn’t true, it could lead Musk and the company to face regulatory action and private lawsuits for misleading information.
Later in the afternoon, an official Tesla blog post from Musk, after trading was briefly suspended, said: “A final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best.”
He went on to cite the potential for wild swings in the stock price “that can be a major distraction,” the limitations of the quarterly earnings cycle and of being the target for short sellers.
“Being public means that there are large numbers of people who have the incentive to attack the company,” he added.
However, there was no mention of the financing that he had talked about in his tweet.
“If his comments were issued for the purpose of moving the price of the stock, that could be manipulation, it could also be securities fraud,” former SEC Chairman Harvey Pitt told CNBC on Tuesday.
“The use of a specific price for a potential going private transaction is highly unprecedented and therefore raises significant questions about what his intent was. So, that would have to be investigated.”
Musk is not a majority shareholder in Tesla, holding less than 20% of the shares - however as CEO, his public statements can be seen to represent the company and, as such, careless thoughts scribbled down on Twitter can have huge, unintended consequences.
Maybe just post a cat video next time eh mate?
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