Elon Musk's tweets suggesting he would take Tesla private "makes a mockery of public markets disclosure", a director of Fidelity Investments has said.
Musk last night said he was considering delisting the electric car firm, offering shareholders $420 per share – around a fifth higher than the price at the time.
His comments – made to his 22.3m Twitter followers – led to Tesla's shares spiking, before being suspended from trading.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Def no forced sales. Hope all shareholders remain. Will be way smoother & less disruptive as a private company. Ends negative propaganda from shorts.
— Elon Musk (@elonmusk) August 7, 2018
This morning Fidelity's Maike Currie told the BBC his unusual move did not constitute insider trading, but raised questions about valuation of the company.
“Insider trading by definition is trading on the stock exchange based on confidential information to your own advantage," she said. "A tweet is hardly confidential but what it does do is make a mockery of public markets disclosure and it is certainly unorthodox behaviour."
"The question is is it realistic to get that kind of funding for an unprofitable company and possibly the bigger question is is it realistic that an unprofitable company is valued at $61bn?”
Musk, who currently owns 20 per cent of the firm, had said one reason to go private was to end "negative propaganda" from short sellers.
George Galliers, managing director at Evercore ISI, said this was "absolutely fair", telling the BBC: "Its very time consuming. There are plenty of short thesis around Tesla on Twitter and the company has to spend time on each of those thesis.”
Galliers added: "Clearly building cars is, from an operational perspective, extremely complex and as a result theres been a lot of volatility in terms of the companys revenues, earning stream and cash flow which has brought the company in for some criticism.”
Last night CNBC quoted a former US Securities and Exchange Commission chair as saying Musk's tweet "raises significant questions about what his intent was".
Former SEC chair Harvey Pitt on @CNBC: Disclosure of material info on Twitter isn't new, but @elonmusk's mention of potential go-private price is "highly unprecedented… and raises significant questions about what his intent was."
— Kayla Tausche (@kaylatausche) August 7, 2018
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