As in most cases when you mix social media and market influencers, it took just one tweet to send the capital markets spinning yesterday when Tesla co-founder and CEO Elon Musk announced he was mulling the idea of taking the Palo Alto, California-based company private–a move that would affect exchange-traded funds with the heaviest weightings of its stock, leaving them in limbo as they await Musk’s next move.
ETFs affected include VanEck Vectors Global Alt Energy ETF (NYSEArca: GEX), ARK Industrial Innovation ETF (NYSEArca: ARKQ) and First Trust NASDAQ Cln Edge GrnEngyETF (NASDAQ: QCLN). Of the three, only QCLN was a smidgen down at .05%, while GEX and ARKQ were both up slightly at 0.04% and 0.57%, respectively.
Related: Elon Musk: Tesla Going Private is ‘Best Path Forward’
With a price of $420 per share, it would effectively bring Tesla’s market value to $71 billion. In an email, Musk expressed to employees that he believes going private would be the “best path forward.”
“I fundamentally believe that we are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we’re all trying to achieve,” Musk wrote.
The decision to privatize Tesla halted trading of the company’s shares on Tuesday afternoon for 92 minutes, leaving Tesla investors in a panic. The shares did resume trading prior to the close of the market, and the share price currently stands at $374.41 as of 3:00 p.m. ET–down 1.38%.
Musk’s two words of “funding secured” has many analysts positing exactly where this source or sources of funds are originating or if there is even any actual capital secured that will allow Musk’s privatization play to come to fruition.
“It’s sort of the same difference between collusion and conspiracy,” said Frank Aquila, an M&A partner at Sullivan & Cromwell. “Collusion isn’t a crime. It means nothing in the legal sense. Conspiracy is a crime. If you say ‘I secured this,’ it could mean you had a conversation. Committed means something else. If you have committed financing, you have documentation and conditions. Secured just means lined up. It doesn’t mean that much.”
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