Elon Musk faces lawsuit over plans to take Tesla private

Elon Musk faces lawsuit over plans to take Tesla private

The founder and chief executive of Tesla is facing a lawsuit from investors after he said he might take the firm private.

Elon Musk said that de-listing the group from the stock exchange could be the “best path forward” for the firm.

Musk wrote in a letter to employees: “Earlier today, I announced that I’m considering taking Tesla private at a price of $420/share. I wanted to let you know my rationale for this, and why I think this is the best path forward.”

“First, a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best. As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders.”

“I fundamentally believe that we are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we’re all trying to achieve. This is especially true for a company like Tesla that has a long-term, forward-looking mission.”

Kalman Isaacs is the plaintiff in the lawsuit and has said that Musk’s plans to take the tech firm off the stock exchange are aimed at  “completely decimating” short-sellers.

Short-sellers have claimed to have lost millions thanks to Mr Musk’s comments.

Musk hopes that making Tesla private will ease off the pressure for the tech group to meet quarterly financial targets and end distractions of share volatility.

Musk has faced plenty of controversies so far this year. In July the group’s CEO apologised to a British cave diver he called “pedo guy”.

David Jones, Chief Market Strategist at Capital.com, said of Musk’s comments: “If the market thinks that this is merely Elon Musk venting his frustration at the amount of scrutiny his company – and its share price – comes under on a weekly basis, then investors may well take some of this week’s windfall profits, and the share price will be under pressure once more.”

“As ever with Tesla and Mr. Musk, there is seldom a dull moment and it is likely to be even more closely tracked now than ever before,” he added.

Shares in Tesla (NASDAQ: TSLA) are currently trading at 355.49 (1229 GMT).