Elon Musk taught every CEO a dangerous lesson today. Musk, CEO of Tesla, tweeted today that
“am considering taking Tesla private at $420, funding secured”.
Tesla stock prior close was around $342. After his tweet, Tesla stock shot up almost 11% to close at $379.57 today and rising to $383 after hours at this writing.
Going Private – Dell vs. Tesla
There’s a reason there are so many SEC regulations governing what not to say or act by company C-level executives. Let’s take Dell as an example. Michael Dell took Dell private in 2013 and Dell stockholders got paid $13.65 per share to leave the company on its own. That price is higher than the $11 range Dell stocks were hovering at.
The point is that rumors did float around about Dell being bought out, but Michael Dell never personally released any statement regarding a target price. Company executives are banned from discussing company stock price due to the potential unfair and biased market-moving effect, let along giving a target price that is 23% higher than the last close of $342.
Greed Knows No Limit
Elon Musk not only set a price target of $420, but also followed up with another tweet minutes later that
“Shareholders could either to sell at 420 or hold shares & go private”.
It seems the purpose of this tweet is to twist the knife a bit more to ensure investors not selling Tesla stocks and “encourage” more buying to bring the stock price up to his target of $420.
Greed certainly knows no limit.
For a company that has never made a profit in 15 years with cash burn and leverage at insanely alarming rate, Musk actually has the nerve to imply Tesla is undervalued at even $360 level? If this is not the most blatant stock and market manipulation to the umpteenth degree, I cannot imagine what else would top it.
