Tesla investors lost $12 million when the tweet titled “Funding Secured” was posted in the middle of a lawsuit against Elon Musk. This happened within ten days. A jury was then informed.
Forensic Economics’ Michael Hartzmark told a jury that the Tesla CEO’s 2018 tweet in which he suggested he was thinking of taking the company private caused “consequential damage” to investors. per Bloomberg.
A group of investors is suing Musk. They claim that his tweet caused massive losses for both short and long-term stockholders. His comments caused wild fluctuations in the stock’s price. Plaintiffs are not seeking damages for the $12 billion loss. Instead, all investors were liable.
Following Musk’s August 7 tweet , which stated “Am considering making Tesla private at $420.” Tesla’s share prices jumped 10% after funding was secured. It rose again, but it fell as the SEC probed the tweet’s veracity and opened an investigation.
According to reports, short-sellers of Tesla were able to lose $3 billion due to the tweet. When his claim was denied, those who held long positions were also burned.
Bloomberg quoted Hartzmark saying that uncertainty is the enemy of investors. The share price would suffer if the shares were sold as a result.
According to the Twitter owner, he is confident that his tweet about funding being secured was accurate. This was based on conversations with Yasir al-Rumayyan (the governor of Saudi Arabia’s Private Investment Fund ) who he stated had “verbally” supported the plan.
Hartzmark claimed that Musk’s tweet was “material” for potential investors as evidenced by emails sent to the company’s investor relations office at time of post. Bloomberg also reported that Hartzmark supported Musk’s argument.
However, Musk’s lawyer Andrew Rossman forced Hartzmark to admit that Musk’s tweet that he was contemplating taking the company private was correct.