Tesla did not respond to a request for comment on the proposed class-action complaint filed in the federal court in San Francisco. Then it fell back, losing about 7 per cent over two days, as doubts mounted about the feasibility of the going-private idea - and about Musk's declaration that funding was already in place.
The 47-year-old investor and engineer stunned financial markets on Tuesday when he said on Twitter that he was considering a take-private deal for Tesla, an auto manufacturing pioneer that developed the world's first luxury all-electric sedan vehicle. In their lawsuits, they have said that through his tweets, Musk has helped in inflating the share price artificially.
But Isaacs said Tesla's and Musk's conduct caused the volatility that cost short-sellers hundreds of millions of dollars from having to cover their short positions, and caused all Tesla securities purchasers to pay inflated prices.
One lawsuit, filed by Tesla investor Kalman Isaacs, said Musk's tweets amounted to a "nuclear attack" on short-sellers, created to "completely decimate" them for not believing in Tesla's stock to date.
However, a source who is familiar with PIF's strategy said it was not now getting involved in any funding process for Tesla's take-private deal.
The Public Investment Fund sees its investment in Tesla as a strategic way for the world's biggest crude producer to hedge against oil, the person said.
Tesla's share price edged higher as markets closed late last night, increasing 0.86 per cent to $355.49.
Mr. Musk tweeted at 12:48 p.m. ET on Tuesday that he had "financing secured" for a buyout of Tesla at $420 a share, a 16% premium to the share price at the time. While the entrepreneur owns 20% of Tesla, more than $60 billion would be needed to buy the business from public shareholders. "Anybody who purchased the stock on that news, if the news was in fact misleading, could have a claim, however, it would be very short class period". A Musk investigation might be a best-case scenario for Tesla shorts, but CNBC's Jim Cramer said an investigation is a longshot. He also said he had secured funding for the proposal, without providing details.