Tesla Stock Price Drops As Musk Mocks The SEC
Tesla stock price dropped significantly this past week after Elon Musk mocked the US regulator, only days after his fraud case was settled.
Tesla shares plummeted by over 7 percent on Friday after Elon Musk, Tesla CEO, tweeted about short sellers and the SEC. The “SEC”, short for US Securities and Exchange Commission is responsible for protecting investors and keeping the securities market functioning in an orderly fashion.
The SEC announced they would be suing Musk for fraud back in September, the news came after he suggested that he would be taking Tesla private.
August 7, Elon Musk inferred that he had secured enough funding to take Tesla private at $420 a share, causing the company’s value to increase rapidly after.
It was soon discovered that Tesla had not secured said funding when court documents were presented to the SEC. The price of $420 was reference to marijuana culture, as it is a significant day for weed smokers.
Since his “Funding Secured” tweet, the SEC has announced that Elon Musk has agreed to step down as chairman and a member of the board of directors at Tesla. He and Tesla would also need to be fines of $20 million each. His Twitter account is also now monitored by the company.
Corporate governance expert, Betsy Atkins, told “Squawk on the Street” that she thinks it is unlikely that Musk is going to stop tweeting. Putting Tesla investors and the board is an awkward position.
Despite recent infractions, Elon Musk is still causing up a stir on Twitter. On Thursday he said: ” The Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!”.
Even after having his Twitter account monitored by Tesla, Elon Musk refuses to be silenced by the SEC or any of his investors.. not to say they haven’t tried.
This is not the first time Musk has addressed short sellers who bet against Tesla stock. No wonder Musk is not friendly with short sellers, Tesla is the most shorted stock in the US stock market.
Friday saw one of Tesla’s biggest sceptics, David Einhorn, respond to Musks’s tweets. He argued that there Tesla is following similar patterns that the failed Lehman Brothers bank did in its last days. Einhorn said this:
Many Twitter users insist that Musk stop his erratic Twitter usage as it is impacting the Tesla stock price and is costing investors money.
Tesla reported delivery numbers that exceeded Wall Street estimates, but shares sold off rapidly as the next earnings report may not be so impressive. Overall, this may cause the Tesla stock price to drop even further.