Markets

Elon Musk’s 4/20 joke got him sued for fraud

Elon Musk’s 4/20 joke got him sued for fraud

Tesla shares sank 12 per cent pre-market, trading near US$270 as of 8:23 a.m.in NY, after the SEC sued Musk on Thursday, alleging that the electric vehicle maker's chief executive officer misled investors through his "taking private" tweet on August 7.

Elon Musk's run-in with the Securities and Exchange Commission may cost Tesla Inc. nearly half its market capitalization, Barclays analyst Brian Johnson said, adding that the company's stock has about US$130 of "Musk premium" per share that could dissipate.

Musk's fall from grace is a victory for short sellers who have spent years betting that Tesla's share price would collapse.

The SEC sued Tesla CEO Elon Musk on Thursday, saying he made "false and misleading" statements in August about possibly taking Tesla private.

After the initial tweet, Tesla's chief financial officer asked Musk "would it help" if executives drafted a blog post or employee email to explain his tweet.

In a jab at Musk's "funding secured" tweet, RBC Capital Markets says the suit "adds further uncertainty to the Tesla story". Many have sent out an ill-advised tweet at least once in their lives, but Musk's joke about taking Tesla private at $420 a share could get him removed from the company.

In a statement, Tesla's board of directors said it remained "fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful USA auto company in over a century". And some billionaires, especially ones who are named Elon Musk, maybe shouldn't be in charge of public companies. That's putting intense pressure on Musk and the board to stop the bleeding. Analysts have expected Tesla to raise fresh money by selling new shares.

OnePlus 6T to come with a 3700mAh battery!
On the back of the handset, we see a vertically-stacked dual-camera setup with a dual-LED flash module placed right below it. So there's no surprise that the biometric technology (and upcoming technologies) will also be coming to OnePlus devices.

"The SEC civil action may lead to Musk's exit from Tesla (either permanently or temporarily) and the Musk premium in the shares dissipating", said Barclays analyst Brian Johnson, who set a $210 price target for Tesla shares.

Musk's response: "This unjustified action by the SEC leaves me deeply saddened and disappointed".

Hanging in the balance is Tesla, the $45 billion emblem of America's future in battery-powered cars. Breakingviews cleverly posits that a Musk-less Tesla will reveal the true value of the innovative but financially challenged company.

But extracting Musk from the company he has become synonymous with could devastate Tesla. "The problem for investors is that an investment in Tesla is an investment in Elon Musk", he said.

Barely a year ago, the stock reached an all-time high of $385 as investors grew optimistic about Tesla's lower-priced Model 3 sedan, the auto that is seen as critical to its goal of becoming a mass-market automaker.

"Despite this, we think the company will survive", he said.

In a joint statement, Tesla and its board reacted late Thursday, saying they "are fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful US auto company in over a century", as reported by The Washington Post. The Motley Fool owns shares of and recommends Tesla and Twitter.


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