Tesla's Musk Faces Class Action Suits Over Tweet


However, Reuters reports that PIF has shown no interest so far in financing Musk's proposed $72 billion deal to take the United States electric vehicle maker private.

"I continue to have discussions with the Saudi fund, and I also am having discussions with a number of other investors, which is something that I always planned to do since I would like for Tesla to continue to have a broad investor base", Musk wrote.

The transaction would be structured with equity so as not to burden Tesla with crushing debt, Musk added.

Musk's tweet announcing the deal - and a proclamation of "Funding secured" - shocked investors, and he has yet to back up his claim that he has financing for the transaction.

That same day, Musk said on Twitter that he was "considering" taking the company private at a $420 buyout price and that funding had already been secured. "Obviously, the Saudi sovereign fund has more than enough capital needed to execute on such a transaction". That has led to inquiries by the Securities and Exchange Commission into the situation and now two class-action lawsuits by investors who USA Today reported contend the company violated federal securities laws via the tweets.

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Musk's tweet stunned investors, with many raising questions about his claim that funding for the venture had been secured. The PIF sees its investment in Tesla as a strategic way for the world's biggest crude producer to hedge against oil, said the people, who asked not to be identified.

Shares of Tesla are now up 13% this year, but still below their $362 price at the time of Musk's first tweet about going private around 1 p.m. Tuesday. It also reflects the fact that Tesla, once the clear leader in the electric-car market, is facing increasing competition and has yet to deliver on its mass production ambitions. The Saudi fund hasn't made any firm decisions on whether to increase its stake, or by how much, but talks are ongoing, sources told Bloomberg.

Following the announcement of Tesla's plans to potentially go private and reports that Saudi Arabia's sovereign wealth fund had amassed a 5% stake, shares surged as high as $389 - a new record.

A representative for Tesla didn't immediately respond to a request for comment. In a tweet on Sunday, the nation's Energy Department said Saudi Arabia now is working to develop a city to support the supply of raw materials and parts for the automobile industry. They are canvassing investors including large asset managers, the people said.