It was a relatively calm market news day on Tuesday, and then Elon Musk's verified Twitter account lit up.
Around lunchtime, a tweet appeared that said Musk was mulling a take-private transaction for Tesla, his electric car company. Much more interesting, the tweet offered a target price, $420 a share, and said the financing was lined up.
Tesla shares jumped almost immediately. Musk has 22.3 million followers on Twitter. The stock was already moving Tuesday after the Financial Times reported that Saudi Arabia's sovereign wealth fund had taken a $2 billion stake in the company.
Securities lawyers said they were shocked by the tweet. "I do not believe this is the appropriate way to suggest going private," said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.
The investing public believed what the tweet said. And if the content of the tweet wasn't true, lawyers said, it could set up Musk and the company for regulatory action and private lawsuits. A series of tweets that dribbled out on Musk's account later in the afternoon suggested they weren't a hoax. Tesla's shares were halted for pending news in midafternoon trading.
That news came out at around 3:30 p.m. ET via a Tesla blog post containing Musk's email to employees. The CEO said, "A final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best." He cited the potential for wild swings in the stock price "that can be a major distraction," the quarterly earnings cycle and being the target of short sellers.