Mr Musk probably wasn't violating any regulations by simply announcing that he was considering taking the company private, Mr Gordon said, but his assertion that the funding already has been locked up could "expose him to at least potential legal risk" if it turns out that the financing is on shaky footing. "Funding secured", Musk said on Twitter, without disclosing the source of the funding.
At US$420 per share, a deal would be worth US$72 billion (S$98 billion) overall.
Tesla shares ended the day at $379.57, within reach of their all-time high and more than 5 percent above the bonds' conversion price of $359.8676. Whether he meant to do that or not, his tweet certainly had that effect: By the time trading halted, Tesla's market value had soared to $61.74 billion, a significant raise from its pre-tweet $58 billion.
Musk has been in a very public battle with these shorts for years.
Musk's tweet comes as Tesla faces continued pressure to ramp up output of the Model 3 sedan, its first effort at the middle market.
But another substantial segment of investors are convinced Tesla is doomed to fail and are betting on the company's eventual demise by becoming "short sellers" of its stock.
The move could be seen as a way for Musk to gain more control over Tesla, but the CEO says that's not his intent.
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What seemed like a joke at first may be serious and as the company's stock price went insane, trading had been halted. He said in his letter to employees that he did not seek to expand his ownership. At $420 a share, Tesla would have an enterprise value of about $82 billion including debt. "Our guess is there is a 1 in 3 chance he can actually pull this off", wrote Gene Munster of Loup Ventures, adding that Mr. Musk's proposed premium over Tesla's existing share price might not be enough to persuade shareholders to sell.
In other words, people need to know ahead of time where that type of disclosure will be posted so they all have an equal shot at the information.
Elon now owns about 20 percent of Tesla and so he would need something like $50 billion in additional capital to fully privatize the company, along with a shareholder vote of "yes" to the move. That came after Musk voiced similar thoughts on Twitter merely an hour earlier, writing: "Am considering taking Tesla private at $420".
Trading in the stock was halted not long after Musk's tweet, with shares changing hands at $366.94, a rise of more than 7% on the day.
After Musk, the next largest shareholders in Tesla are the mutual fund giants T. Rowe Price and Fidelity, with stakes of more than 9% and 8%, respectively, according to Thomas Reuters Eikon.
The tweet spurred a rush of trading in Tesla's options, driving volume to 500,000 contracts, more than twice the daily average, according to options analytics firm Trade Alert. Tesla did not immediately respond to requests for comment.
"I would like to structure this so that all shareholders have a choice", Musk wrote.
Tesla shareholder Quint Tatro, managing director of Joule Financial, praised the idea as "brilliant", adding that "Musk is exhausted of dealing with all the challenges of being 'public'". "Plus this is short squeeze rocket fuel after a nice quarter", said analyst Chaim Siegel from Elazar advisers.