Tesla without Musk at the wheel? Quite likely

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SEC's complaint held that Musk fabricated the August claim, causing Tesla's shares to rise since he had not really confirmed the key terms and conditions of the deal with any potential funder.

Shares of Tesla dived 11 percent on Friday as Wall Street anxious the lawsuit could force Musk to step down and make it hard for the loss-making carmaker to raise more capital. The prospect of having the fraud charges and Musk's potential departure hanging over Tesla led to an immediate 12 percent drop in the company's share prices today. Under the settlement, Musk would have been absolved of guilt but forced to step down as chairman for two years, the report said. Musk is ineligible to be re-elected chairman for three years, but he can stay on as CEO.

Musk's tweets saw Tesla's stock jump by more than six per cent on August 7, but the price crashed by more than 13 per cent when the SEC filed its complaint. Twelve minutes after the first tweet, Tesla's head of investor relations texted Musk's chief of staff to ask whether Musk's announcement was "legit", the SEC said.

The settlement tackles Musk's behavior by "strengthening Tesla's corporate governance and oversight", SEC enforcement co-director Stephanie Avakian said. Cowen analyst Jeffrey Osborne wrote on Friday that he thinks Tesla will need to raise $2 billion in the fourth quarter. Despite them telling him it wasn't a realistic idea, Musk fired up his thumbs and tapped out his now-infamous tweet announcing that he was "considering taking Tesla private at $420".

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Musk said he had done nothing wrong. Short sellers notched $1.27 billion Thursday alone in paper profits, according to S3 Partners, which said Tesla recently regained the title of most-shorted US stock. "They want to make an example out of him". This may give the board the backbone to put Musk in a visionary role.

Tesla's lofty market valuation - $52 billion at the close Thursday - hinges on the expectation that Musk will deliver on those goals, said Maryann Keller, an independent auto industry consultant who used to be on the former Dollar Thrifty Automotive Group board. Musk, the company's largest shareholder, lost $1.6 billion in a single day.

The very attributes that have fueled a mania around Elon Musk - his vision, brash personality and willingness to take risks - could prove to be his downfall.

Given that Tesla has mostly lost money throughout its history and has had trouble meeting its own production targets while burning through cash, the company's stock could be in danger of cratering without Musk's aura.