Economy

Tesla call options jump on Musk tweet, short-sellers hurt

Tesla call options jump on Musk tweet, short-sellers hurt

Tesla CEO Elon Musk says he is considering taking the electric auto maker private.

He claims Tesla is the most shorted stock "in the history of the stock market" and that going private would remove them from the narrative. Even as the world's 31st-richest person and Tesla's largest shareholder, Musk would be reliant on outside funding for any buyout since his fortune is highly illiquid.

If the company were to go private, Musk said neither he, nor any current shareholder, would have a controlling vote in the new system.

Tesla shares rose almost 9 percent before being halted pending news.

Starting in November, Tesla faces repayment of $1.7 billion in debt over the next 18 months that is tied to the company's stock price.

UPDATE 3:46 PM EST: Musk published a blog post on Tesla's website which contained an email to employees explaining why taking Tesla private may be the right move for the company.

Earlier in the day, the Financial Times reported that Saudi Arabia's sovereign wealth fund, overseen by Crown Prince Mohammed bin Salman, has built an undisclosed stake of between 3 and 5 percent stake in Tesla.

It's also unclear whether the tweet could get Musk in trouble with the U.S. Securities and Exchange Commission.

Tesla stock was halted for more than an hour and a half and resumed trading up 11 percent to $380.60 as of 3:49 p.m.in NY.

In a second tweet on Tuesday, Mr Musk said taking the company private would not lead to a single dominant shareholder. And if the information in the tweet isn't true, Musk could be looking at some stock price manipulation allegations.

"The 16% premium to current share price may not be high enough to incentivize existing shareholders to support the sale", Munster wrote in a note.

In 2013, he emailed SpaceX employees that he was "hesitant to foist being public" on the company "given the long term nature of our mission".

"The market doesn't believe him", said David Kudla, the CEO of Mainstay Capital Management, which is betting against Tesla.

Tesla did not immediately respond to requests for comment.

But asked if he would take legal action against Musk over the allegation, Unsworth said: 'If it's what I think it is yes'.

Tesla has burned through cash while struggling to produce the Model 3, its lowest-priced electric auto.

George Galliers, analyst at Evercore ISI said he believed the tweet was serious.