Tesla CEO, Elon Musk, after surprising the board of directors and the world at large by smoking marijuana and sipping whiskey in a 2 1/2 –hour podcast on “The Joe Rogan Experience” has again made the headlines.
Securities and Exchange Commission (SEC) has moved to court as asking a New York judge to hold him in contempt for violating a settlement over some social media comments.
The move comes after he tweeted about the company’s scheduled production, “Tesla made 0 cars in 2011, but will make around 500k in 2019.”
Sometime last year, he had agreed not to make any statements concerning the car firm’s financial performance without any prior agreement with Tesla.
The settlement had followed after he had tweeted last year in August about Tesla going private.
There was no after-comment by Tesla or Musk on the issue regarding SEC’s move.
After SEC made a move, Tesla’s share price fell by 5% hours after trading on Wall Street.
Just last week, Elon Musk had posted an aerial view of numerous new cars by Tesla. This was when he tweeted saying he expected the firm to make an approximate of 500,000 vehicles in 2019.
In SEC’s defense, they filed the court papers on Monday in New York saying, “he once again published inaccurate and material about Tesla to his over 24 million followers including the press and made inaccurate information available to anyone with internet access.”. SEC argued that Mr. Musk did not have prior approval from Tesla before going to his Twitter and publishing such sensitive information. In the court filings, SEC stated that the information posted was inaccurate and Musk was in breach of the previous agreement.
The financial regulator in its motion wrote that Musk had violated the Court’s Final Judgment by not adhering to the agreement which required him to get preapproval for publishing anything regarding Tesla.
Musk’s defense was that the production numbers were revealed publicly in a call with financial analysts during Tesla’s fourth quarter results.
Just as company finances are crucial, so are your finances. Nobody wants to be called by debt collection agencies such as Allied Interstate over an unpaid debt. Keeping the company finances confidential should be a priority for every staff member.
Musk further tweeted, “Meant to say annualized production rate at the end of 2019 probably around 500k, i.e., 10k cars/week. Deliveries for the year still estimated to be about 400k.” He further on criticized SEC for not seeing and reading the transcript of the analysts’ call.
How all this controversy began
After Musk took to social media in August making suggestions that he had ‘funding secured’ with rumors of accepting a deal to make Tesla private, the firm has had a difficult time.
The shares recorded a decline, but after feedback from shareholders, Musk backed away from the initial plan of privatization.
At the time, Tesla was ordered by US authorities to pay a $20million fine for civil fraud over publishing misleading tweets over an unsecured financing deal. Musk then stepped down from his role as chairman which he had taken over three years ago. Robyn Denholm replaced Musk as the head of the board.
Robyn joined the board in August 2014 as an independent director. She is among seven directors on the board who were not employed by Tesla. Her impressive career precedes her. Robyn has previously worked at Silicon Valley for Juniper Networks and Sun Microsystems. Also, she has had a finance career at Toyota for seven years in Australia.
Despite the previous charges, Tesla had come out to defend Elon and said they were still confident in his integrity and leadership of the company regardless of smoking marijuana on the podcast.
Investors have called for an oversight of his behavior which has attracted a lot of attention. On the previous agreement of paying $20m, Elon in an interview by CBS had stated that he had ‘no respect’ for SEC. He further said that he had decided to pay the fine because he had faith in the justice system.
Tesla’s shares were down by 3.3% on Tuesday. Over the years, Tesla’s stock has cumulatively gone down to 15% over the past year which is alarming.
Tesla in a nutshell
Tesla was founded in 2003 by Martin Eberhard and Marc Tarpenning as Tesla Motors. In 2017, the company changed its name to Tesla.
In 2018, Tesla was named the world’s best-selling plug-in passenger car manufacturer. This was based on 245,240 units delivered as well as a market share of 12% in plug-in segment sales.
In the 4th quarter of 2018, it recorded production of 526,758 cars and further on sold 90,700 of them which was an increment from the 3rd quarter having sold 83,725 vehicles.
Tesla sells its cars purely only and is the only car company that sells directly to consumers.