Tesla’s Elon Musk Screws Up…Again
Peter Sayles |
Here we go again…
Elon Musk commits securities fraud again.
He told the world he had “funding secured” for Tesla to get bought out on Twitter back in August 2018.
We told readers right after no one would buy Tesla at that price. Even when the media was going crazy speculating who the buyer was.
We even went so far as to short Tesla a second time. We’re up more than 13% from our entry price as of February 26th. (Readers pocketed 25.6% returns shorting Tesla the first time around.)
Musk settled with the Securities Exchange Commission (SEC) after the “funding secured” tweet.
Everyone knew the SEC had a bit of egg on its face for letting Elon off so easy… considering this was the most fundamental and blatant violation of securities fraud in recent past.
But then Elon looked straight in the camera – on national television show 60 minutes – and said “Let me be clear, I do not respect the SEC.”
We don’t know anyone working at the SEC. But we don’t think they appreciated getting mocked on national television.
Then Elon gave them a gift.
Elon tweeted again. And told his 25 million Twitter followers Tesla would produce 500,000 cars in 2019.
Why is this a big deal?
Because it’s a definitive statement. Which conflicts with his original guidance of 350k-500k cars sold in 2019 from Tesla’s previous earnings call.
Part of Elon’s settlement was that (paraphrasing):
- He isn’t allowed to claim anything definitive that could move the stock price;
- He had to clear these types of tweets with the SEC to make sure it didn’t violate bullet #1.
This tweet violated both.
The SEC wasn’t pleased. And asked a federal judge to hold Musk in contempt.
The SEC statement was: “Musk has not made a diligent or good faith effort to comply with the provision of the court’s final judgment requiring pre-approval of his written communications about Tesla… While Musk claims to ‘respect the justice system,’ his deliberate indifference to compliance with this court’s final judgment indicates otherwise.”
We think Elon was doing whatever it could to boost the share price… because it’s facing a $900 million bond payment due March 1st – which will kill the company.
Tesla’s shares are down 3% pre-market heading into February 26th.
We’re not sure what will come of Musk or Tesla. We might go as far as to speculate Musk might be forced to step down as CEO.
But we’ll have to wait to find out.
Readers are up 13%. And should continue to hold. There’s a lot more pain ahead for Tesla.