Tesla’s stock is currently trading at around $230. On this day last year, investors thought shares could soar to $420 or more, based on a puzzling tweet from CEO Elon Musk.
The out-of-nowhere suggestions of a buyout—at a hefty premium to the $360 share price at the time, and with “funding secured” no less—sent markets into a tizzy. The purported deal would’ve been worth some $82 billion. How would it work? Who would stump up the cash? Was this some elaborate joke?
In subsequent days, Musk tried to fill in some of the details and suggested that the Saudi Arabian sovereign fund was lined up as a buyer, with “more than enough capital needed to execute on such a transaction.”
As we know now, there was no deal forthcoming, and funding was far from secured.
Shareholder lawsuits and scrutiny from US securities regulators quickly landed Musk in legal trouble, culminating in $40 million in fines. As part of a settlement, Musk was forced to step down as Tesla’s chairman and have his Twitter musings supervised by a committee of company directors (this was later strengthened to pre-approval of certain tweets by lawyers, after Musk was deemed to have violated the original agreement).
In the year since Musk’s infamous tweet, Tesla has failed to deliver the profitability its CEO promised, despite strong sales growth. Over the past year, Tesla’s stock has fallen by around 40%, erasing more than $20 billion in market cap in the process.
And if you think that people aren’t still reading things into Musk’s cryptic tweets that might not be true, think again.