Elon Musk tweet might cost Tesla more than $14 billion

Elon Musk

Elon Musk, the often controversial and outspoken CEO of Tesla, has not only cost the electric vehicle and solar power business about US$14 billion with a tweet but faces action from the Security and Exchange Commission in the US.

Elon Musk, who co-founded Tesla and is the founder of SpaceX, tweeted about the Tesla stock price on Friday (US time), 24 hours after Tesla recorded a small profit in its first quarter financial result.

The tweet wiped US$14 billion off Tesla’s value as investors sold the stock, also losing Musk himself US$3 billion. He is worth about US$36.8 billion, according to Forbes.

Tesla was trading around US$760.23 before the tweet from Elon Musk. It plunged to US$717.64 and continued to fall to US$701.32 at the close of the market. It rallied slightly in after hours trading to US$708.

Elon Musk, due to a tweet on 8 August 2018, fell foul of the Security and Exchange Commission. He said that he wanted to take Tesla private at US$420 per share as he had the money to buy everyone else’s shares. He did not follow through and was fined US$20 million by the Security and Exchange Commission and required pre-approval from company lawyers before making any announcements about Tesla

After the “Tesla stock price is too high imo” tweet, the Wall Street Journal reported it had asked Elon Musk if he was joking about the share price tweet and whether it had been vetted, receiving the reply “No”.

Shanhai, China, elon Musk, Tesla, CEOI
Elon Musk at Tesla’s plant in Shanghai, China.

That might be more problematic than the actual tweet unless Musk starts buying the shares at a reduced price, or Tesla participates in a buyback program, which has not been announced.

“If it was not vetted, he’s at risk of being hauled into court again by the SEC,” Steve Diamond, a law professor at Santa Clara University, California, told The Verge. “The process was meant to catch these kinds of tweets before they went out. If he did it spontaneously, I think he’s gonna have an issue.”

Jay Dubow, a partner at Pepper Hamilton who focuses on white collar litigation, feel Musk has put the Security and Exchange Commission in a tough position.

“They’re going to have to react and do something,” Dubow told The Verge. “Because this was a clear violation of the order and I don’t know how they’re going to let that go.”

Elon Musk also tweeted the following:

Then he mentioned his girlfriend, the Canadian musician Grimes, who is pregnant with his child.

Subsequently Musk, whose SpaceX Crew Dragon is undergoing final preparations ahead of its historic first flight with NASA astronauts to the International Space Station later this month, has been busy on social media all weekend.

On a different note he tweeted that the Louis Armstrong song ‘What a Wonderful World’, released in 1967, was “one of the all-time best songs”. We can only agree.

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