The financial confusion erupted shortly after Tesla announced plans to acquire Grand Rapids-based Riviera Tool LLC. Investors scrambled to invest in Riviera, but ended up dumping money into the wrong company.
As it turns out, investors were snatching up shares of Riviera Tool Co., which actually went out of business in 2007, according to the Detroit Free Press. Riviera Tool Co. eventually resurfaced as Riviera Tool LLC (which is the company Tesla is buying) but the two firms are not linked in any legal way. Think of it as the new GM versus the bankrupt entity of the automaker.
Despite that small fact, investors still scooped up as many shares of Riviera Tool Co. as they could find. Although the company was delisted from the American Stock Exchange eight years ago, shares of the company are still available on the so-called “pink sheets” market.
As a result of that sudden interest, shares of Riviera Tool Co. shot up from $0.00006 to 60 cents per share, marking an incredible 10,000 percent gain. The stock closed on Thursday at 22 cents, up a still astounding 4,400 percent.
The Financial Industry Regulatory Authority put a stop to trading on the defunct company, but it remains to be seen what will be done about all of the bogus trades.
This isn’t the first time Tesla’s name has been tied to a stock controversy. On April Fool’s Day Tesla issued a fake press release claiming that the company was launching an all-new model, which was simply a parody of the Apple Watch. However, some news agency picked up on the headline, sending Tesla’s stock artificially higher for a brief period.
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