Elon Musk set the stock markets on Tuesday with one tweet. If you do not act yourself, it is useful to explain how he has done it again. Tesla has been in heavy weather for a while, not least because of all the drama and delay around the affordable Model 3 electric car that the company only just to be able to produce a little to scale. Financially, it goes all the time but just fine and if the cash flow of Tesla dries up, it can just be over with Tesla.
Logically, there are more than enough people who do not believe that everything is going well and a large part of it is on the stock market. Specifically, there are a lot of investors who have gone ‘short’ on Tesla. That means they have now taken money for Tesla shares, which they then have to deliver at a later date. Those people do not have the shares, but assume that the price falls so that they can get them cheap at a later time and thus make a profit.
Normally that is a guess that you make based on your feeling and you can not do much more about it, but in these times of information pollution there are activist shortsellers who do not miss the opportunity to use Tesla in social media and the press. to give a negative light. Then you have the wrong thing about Musk, because he does not pick that up. All that negative publicity does not help and Musk can take care of that himself. But what can you do? If you can buy enough money you could buy back the shares of your own company and become a private company again. That plan he announced last Tuesday on Twitter:
Those two sentences were enough to turn everything upside down. If the Musk were to succeed he would kill two birds with one stone. Not only would Tesla be free of the manipulation of the shortsellers (Tesla is the most sharpened share ever) and it would take the same shortsellers where it hurts: the wallet.
If it happens that the shares are bought back, the people who have already sold their fictitious shares are obliged to buy the shares at the latest the day before the repurchase to complete the transaction. By that time the price probably increased considerably or at least the $ 420 promised by Musk, and then all those shortsellers make an appalling loss. Billions in total. Ideal!
Musk explained the whole story once again in a Tesla blog . It is all logical and for Tesla it would be great. Then they can do their utmost without external influences to make as many cars as possible as quickly as possible, because there are still half a million people waiting for a Model 3. The advantage for the positive investors is that they can keep their investment in Tesla, albeit in a different way.
Supervisor wakes up
The Securities and Exchange Commission, better known as the SEC, is now also involved in the story. The share price of Tesla is (as you might expect) after the tweet of Musk sharply shot, so hard even that the trade in the share was shut down. Very nice, but the SEC would like very much to know or Musk’s statement that the financing for buying back the shares is already around is also true.
If that is not the case, then there is a question of stock market fraud, because then Musk has pulled up the price with a small monkey. In the worst case, Musk could face imprisonment, but that is only the least: it would more than likely mean the end of Tesla. So let’s hope for the company that Musk has not exaggerated and can prove that his plan is really feasible. We will undoubtedly hear more of it soon.