Tesla is 'very close' to profitability, Musk says in staff email

Muriel Colon
October 1, 2018

Musk's tweet about taking his company private, along with attacks on critics on social media, raised concerns with investors about whether Musk has become too focused on criticism from so-called short-sellers who had been making bets against him and Tesla.

The settlement, reached on Saturday, comes after Musk initially rejected the charges, claiming they were "unjustified". As part of the deal, Musk and Tesla will also both pay $20 million, while the former will neither admit nor deny the allegations.

The row began in August when Musk (47) tweeted that he was considering taking Tesla private at $420 a share and had secured funding.

The SEC's lawsuit had sought to bar Musk from serving as an officer or director of a public company, a prospect that rattled investors.

However, the CEO of Tesla, of course, Elon Musk may resume this position within 3 years and managed to remain as the CEO of Tesla.

As of Friday afternoon, Tesla's stock price dropped by 14 percent to $264.77, erasing $7.3 billion in shareholder value.


Musk will purchase $20 million worth of the company's stock in the next trading opportunity, according to a person familiar with his plans.

"This is a good resolution for Tesla stakeholders", Ben Kallo, an analyst at Robert W. Baird & Co. with the equivalent of a buy rating on the shares, said in an email.

The $40 million in financial penalties "will be distributed to harmed investors under a court-approved process". The SEC said the company had no way to determine if his tweets contained information that must be disclosed in corporate filings, or if they contained complete and accurate information. However, if found guilty, Musk stood to lose a lot more than $20m and could have been ousted as CEO of the company. Tesla had come under criticism for years prior to Musk's take-private episode for lax governance, though shareholders sided with the board in June by voting against an independent chairman proposal and approving the re-election of three directors.

But its shares have been hit hard since the SEC filed the lawsuit.

Gore has previously noted his admiration for Tesla and Musk.

Two "independent directors" will also be appointed by Tesla, and the company will set up a new committee of independent directors and "put in place additional controls and procedures to oversee Musk's communications", the SEC said.

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