Summary:
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Tesla shares sink over 10% on SEC probe
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Founder and CEO Musk investigated for tweet
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US100 remains close to record peak
Tesla is back in the headlines today with the stock plunging over 10% after it emerged after last night’s closing bell that the SEC filed a lawsuit accusing CEO Elon Musk of defrauding investors when he tweeted last month that he was considering an offer to take the company private. Their complaint alleges that Musk “falsely indicated” that he could “take Tesla private at a purchase price that reflected a substantial premium over Tesla stocks then-current share price, that funding for this multi-billion dollar transaction had been secured, and that the only contingency was a shareholder vote.” Musk “had not even discussed, much less confirmed, key deal terms, including price, with any potential funding source,” the SEC said in its complaint.
Tesla’s stock has opened sharply lower today after news of the lawsuit. The Tweet from Musk which stated that he had “funding secured” to take the firm private at $420 actually marked a high for the stock at 383. Price since drop by more than a third when investors realised the deal wasn’t going ahead. 253 a possible level to look to on the downside. Source: xStation
Sources this morning have said that Musk refused to pay a nominal fine and give up the role of chairman for two years as part of a settlement with the SEC. Musk reportedly refused to sign the deal as he felt by settling he would not be truthful to himself and he wouldn’t have been able to live with the idea that he agreed to accept a settlement and any blemish associated with that, the report said. There has been some good news in recent minutes however with reports from Electrek that the firm has achieved it’s Model 3 production goal for a record quarter with 2 days still to go. While there is little doubt that Musk is the creative force behind the firm, there are growing calls for him to step back and take a less prominent role from investors, with his unorthodox approach and outspoken remarks doing little for the share price.
The final data point of note from the US this week has shown a little dip in the Uni Mich, but this metric remains above 100 and close to its highest levels in many years. The consumer sentiment index came in a 100.1 vs 100.6 consensus forecast, with the prior reading of 100.8 the highest since March. Also of note is a dip in inflation expectations, with the 1-year forecast amongst respondents now 2.7% from 2.8% previously.
US consumer sentiment remains buoyant with both the Uni Mich and conference Board readings not far from their highest levels this decade. Source: XTB Macrobond
The US100 is on for a solid week of gains with the market not far from it’s all-time peak of 7696. The bearish engulfing W1 candle at the start of September is yet to be negated but it should be pointed out that this hasn’t previously worked very well as a reversal signal. Source: xStation
