Pomerantz LLP announces that a class action lawsuit has been filed against Tesla, Inc. (“Tesla” or the “Company”) (NASDAQ: TSLA) and certain of its officers. The class action, filed in United States District Court, Northern District of California, and docketed under index 18-cv-05470, is on behalf of a class consisting of all persons other than Defendants who purchased or otherwise acquired Tesla securities between August 7, 2018 through August 17, 2018, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
Tesla Inc. designs, manufactures, and sells high-performance electric vehicles and electric vehicle powertrain components. The Company owns its sales and service network and sells electric powertrain components to other automobile manufacturers. It primarily offers sedans and sport utility vehicles.
On August 7, 2018, Defendant Elon Musk, Tesla’s co-founder, Chairman, and Chief Executive Officer (“CEO”), issued the following statement via Twitter: “Am Considering taking Tesla private at $420. Funding secured.”
In reaction to Musk’s tweet, the price of Tesla’s common stock increased, reaching an intra-day high of $387.46 per share—$45.47 per share higher than the previous day’s closing price—and closed at $379.57per share on August 7, 2018, an increase of $37.58 per share, or approximately 11%.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Defendants had not secured funding for a transaction to take Tesla private; (ii) Tesla’s Board of Directors was unaware of any plan to take Tesla private; (iii) Musk had not retained advisors in connection with his purported plan to take Tesla private; (iv) the status and likelihood of Tesla going private was therefore misrepresented to the market; and (v) as a result, Tesla’s public statements were materially false and misleading at all relevant times.
On August 8, 2018, reports began to emerge that the SEC had made inquiries into Musk’s tweet and whether it was truthful that he did, in fact, have “funding secured” to take Tesla private.
Following this news, Tesla’s stock price fell $9.23 per share, or 2.4%, to close at $370.34 per share on August 8, 2018.
On August 9, 2018, Tesla’s stock price continued to fall after facts emerged after the market closed on August 8, 2018 and later on August 9, 2018 that Musk’s tweet had, in fact, triggered an SEC inquiry. For example, The Wall Street Journal reported that the SEC “has asked Musk to produce proof that he’s secured funding. . .” and numerous other media sources reported that Musk did not have funding secured prior to issuing his statement to that effect via Twitter.
Following this news, Tesla’s stock price fell by more than $17.89 per share, nearly 5%, to close at $352.45per share on August 9, 2018, resulting in a two-day decline of more than 7%.
On August 13, 2018, post-market, Musk stated via Twitter: “I’m excited to work with Silver Lake and Goldman Sachs as financial advisers, plus Wachtell, Lipton, Rosen & Katz and Munger, Tolles & Olson as legal advisors, on the proposal to take Tesla private.” However, on August 14, 2018, Bloomberg reported that at the time of Musk’s August 13, 2018 Twitter announcement, neither Goldman Sachs nor Silver Lake were yet working with Musk pursuant to a signed agreement or in an official capacity.
On this news, Tesla’s stock price fell $8.77 per share, or nearly 2.5%, to close at $347.64 per share on August 14, 2018.
Then, on August 16, 2018, The New York Times published an interview with Musk in which he described the circumstances leading up to the tweet, including his high stress levels and his use of the sedative-hypnotic sleep medication Ambien in order to cope with his stress.
On this news, the price of Tesla stock declined $29.95 per share, or 8.93%, to close at $305.50 per share on August 17, 2018.
On August 24, 2018, Musk issued a statement on the Company’s website, stating that he would abandon his plan to take Tesla private.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.