Tesla short-sellers back in force as shares remain shaky

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Chief Executive Elon Musk's buyout tweet last week: Why did Nasdaq let trading in Tesla shares continue for more than an hour afterward?

The share fall has been fueled by investor skepticism over the deal's prospects and media reports that US regulators are asking Tesla why Musk announced his plans on Twitter and whether his statement was truthful.

"Musk's tweets helped push Tesla's stock price more than 13 percent above the previous day's close". Tesla shares are now up just 3.6 percent from where they traded prior to Muck's tweet and are 16.1 percent below the reported $420 takeover price. Isaacs is seeking approval to become the lead plaintiff in a class-action lawsuit representing all Tesla shareholders who traded after Musk's tweet on Tuesday or at any time on Wednesday.

William Chamberlain, another investor, also filed suit with accusations of artificial inflation.

Taking Tesla private would remove the pressure from Musk coming from hedge funds betting that the company's stock will drop given its production issues and negative cash flow.

The U.S. Securities and Exchange Commission is examining whether Musk's funding-secured tweet was meant to be factual, intensifying its scrutiny of Tesla's public statements after the announcement, according to people familiar with the matter.

But none of the six major USA banks has offered to lend the necessary amount to Musk, and they learned about the plans on Twitter with the rest of the public, several banking sources told AFP.

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In a blog post, he said going private would liberate the company from the quarterly reporting cycle, allowing it to be "free from as much distraction and short-term thinking as possible".

Tesla shares were down -0.9 percent at $355.78, on Friday morning.

Einhorn added a tongue-in-cheek comment that the shorts "did come with some manufacturing defects", he said.

Musk's attitude toward short sellers could be relevant, securities law experts have said.

The complaint said the class period begins on the afternoon of August 7, when the defendants launched their "nuclear attack" on short-sellers, and ends the next day.

Tesla is facing a make-or-break moment in its eight-year history as a public company, as competition from European automakers is poised to intensify with new electric vehicles from Mercedes, Audi, BMW and other rivals.

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