Tesla shares plunge as DoJ opens criminal investigation into Elon Musk tweets

Margi Murphy
By Tuesday of this week Mr Musk has been sued for libel after repeatedly calling a British diver a paedophile and announced that he is sending a Japanese billionaire on a trip around the moon - AP

Tesla shares have plunged sharply after the US government launched a criminal investigation into the company. 

The Department of Justice has launched a fraud probe after chief executive Elon Musk tweeted last month that he had "funding secured" for a buyout of the electric carmaker. It was unclear at the time if this was the case.

Shares in the luxury electric carmaker dived as much as 6pc after details of the investigation were first reported by Bloomberg. Tesla is already under investigation by the US securities regulator, the SEC, over conflicting statements made by the company and its founder regarding plans to take the company private.

Mr Musk tweeted on August 7 that he had “funding secured” to take Tesla private at $420 a share.

The ill-fated tweet caused shares to rocket at the time, climbing as much as 11pc after the South African entrepreneur published it to 22m Twitter followers. By the end of the day, Tesla's value had jumped by $6.3bn (£4.9bn) and Mr Musk was $1.2bn richer

Typically, public companies planning to de-list would make announcements of this kind through official channels, formally alerting shareholders to their plans.

Tesla later backtracked, releasing a statement that a decision had not yet been made. Days later Mr Musk confirmed that the company would remain on the public markets.

In a statement released at the time, Tesla said it was “subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders”.

Tesla has become one of the stock market’s most shorted companies, a source of intense frustration for Mr Musk. Short-sellers make money by borrowing shares, selling and then buying back at a cheaper price to return to the original lender.

On Tuesday a spokesman said: “Last month, following Elon’s announcement that he was considering taking the company private, Tesla received a voluntary request for documents from the Department Of Justice (DOJ) and has been cooperative in responding to it.

"We have not received a subpoena, a request for testimony, or any other formal process. We respect the DOJ’s desire to get information about this and believe that the matter should be quickly resolved as they review the information they have received.”

News of the investigation is just the latest scandal for the technology mogul. On Monday a British diver who led the rescue of 12 Thai boys from a flooded cave sued the billionaire for repeatedly calling him a paedophile.

Vernon Unsworth, 63 from Hertfordshire, filed a libel suit in a California district court seeking in excess of $75,000 and said he planned to do the same in London’s High Court.

Musk initially apologised for calling Mr Unsworth a “child rapist” on Twitter, but later repeated the allegations in an email to a Buzzfeed journalist who published them on the news website.