Tesla a victim of fake news! Why chaos follows Elon Musk

The essential ingredient to a successful ‘fake news’ assault is plausibility. So, when Elon Musk’s Tesla fell victim to a fraudulent press release saying it had bid for a little known US lithium company it was not surprising that investors piled in sending the ‘supposed’ target’s share price up more than 5000 per cent.

For many, this will seem like a sweet irony – even payback. Musk regularly takes to Twitter to muse about corporate moves he might make, sending the prices of digital currencies, Tesla or more recently Twitter into a whipsaw formation.

Only a week ago he tweeted that Tesla might have to buy into the not so rare but very high-priced metal. “Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve,” Musk declared in a tweet last week.

Thus, the fraudsters that perpetrated this hoax used Musk’s own words to great effect to add authenticity and, one presumes, could have pulled off the perfect crime assuming they didn’t get caught.

In a week when Musk-centric disclosure issues have dominated corporate news in the US, the fake bid isn’t the most important but it is emblematic of disclosure dysfunction.

On the scale of investors being uninformed to being completely conned by fake news – Musk has traversed the spectrum. It is fair to say that if one Google searches “corporate disclosure” Musk should rank high.

(It is hard to forget that Musk was sued by the US securities regulator for tweeting that he had secured financing for a bid to privatise Tesla in 2018).

But it is the absence of communication from Musk that has sparked maximum controversy this week.

When Musk acquired a 9.2 per cent stake in Twitter during March, he was strangely quiet about the stealth accrual of stock. The disclosure 10 days later which sent Twitter’s share price roaring north by 27 per cent is now the subject of a class action from investors who allege they missed out on the share price gain and that Musk was legally obligated to declare his stake when it reached 5 per cent.