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Tesla Shares Sag after SEC Accuses Musk of Misleading Investors
Shares in Tesla Inc. dropped 14% to $263 by mid-afternoon today, wiping out more than $6 billion in market value for the electric carmaker.
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Shares in Tesla Inc. dropped 14% to $263 by mid-afternoon today, wiping out more than $6 billion in market value for the electric carmaker. Shares had closed below $308 on Thursday.
The decline was sparked by yesterday’s Securities and Exchange Commission lawsuit, which claims CEO Elon Musk harmed investors last month by announcing he had secured funding to take the company private at $420 per share.
Musk later backtracked, conceding he the necessary funding was not assured. A few days later he announced he no longer favors delisting the company. Musk also is the subject of a U.S. Dept. of Justice criminal investigation into possible criminal fraud about the would-be privatization move.
The SEC’s lawsuit before a federal district court in New York City asks, without mentioning Tesla by name, that Musk be barred from serving as an officer or director of any public company. Analysts say forcing Musk out of the company would further depress Tesla’s stock price and raise borrowing costs. Some analysts estimate that Musk’s presence at the company is worth about $130 per share.
Reports say that Musk rejected a settlement with the SEC earlier today that would have forced him to pay a small fine and step down as Tesla’s CEO for two years.
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