SEC Lawsuit Against Musk Wiped $7.3 Billion From Tesla’s Market Value
The electric vehicle maker is expected to report third-quarter production numbers on Tuesday, following a period of turbulence, including a run-in with securities regulators that culminated in Musk being ousted as Tesla's chairman and hit with a multimillion-dollar fine.
Musk's tweet about taking his company private, along with attacks on critics on social media, raised concerns with investors about whether Musk has become too focused on criticism from so-called short-sellers who had been making bets against him and Tesla. The agency backed off from ousting him as chief executive officer.
Tesla stock rose 17.3 per cent to $310.70 after a 14 per cent plunge on Friday, which left it slightly higher than it finished Thursday.
Tesla announced Tuesday that it delivered 55,843 Model 3s between July and September, confirming reports that the company's mass-market electric is the fifth bestselling vehicle model in the United States. Under the settlements, which are contingent on court approvals, Musk will step down as Tesla chairman and will be replaced by an independent chairman.
However, in two emails - one dated September 28 and the other September 30 - Musk exhorted staffers to "ignore the distractions" and that the company was close to "proving naysayers wrong", the CNBC report said. Musk won't be eligible to be re-elected as chairman for three years. It appears that future production goals are reportedly 6,000 per week and eventually 10,000, which CEO Elon Musk targeted as a company goal by the end of 2018. Following Musk's Twitter antics, Telsa and Musk are under investigation for possible criminal fraud due to Musk's "funding secured" tweet.
Musk and Tesla were also fined $20million each. There remain significant opportunities to grow the addressable market for Model 3 by introducing leasing, standard battery and other lower-priced variants of the auto, and by starting worldwide deliveries. Tesla has already agreed to the settlement and the company will also be required to appoint two new independent directors to its board and hire a lawyer to monitor Musk's communications, including his tweets.
"The resolution is meant to prevent further market disruption and harm to Tesla's shareholders", Steven Peikin, co-director of the SEC's Enforcement Division, said in the statement.
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