Tesla’s stock price dropped sharply on Elon Musk Tweet
Tesla CEO Elon Musk tweeted Friday that the company’s stock price was “too high” in his opinion. This immediately sent the shares into a free fall and in possible violation of an agreement reached with the U.S. Securities and Exchange Commission (SEC) last year. Tesla shares fell nearly 12% in the half-hour following his stock price tweets. Tesla shares rebounded later in the day to close at $701.32 a share, a 7.17% decline from the opening.
The stock price tweet wasn’t the only bizarre tweet the CEO sent. The tweets covered everything from demands to “give people back their freedom” and lines from the U.S. National Anthem to quotes from poet Dylan Thomas and a claim that he will sell all of his possessions.
The barrage of tweets was sent when SpaceX, Musk’s other company, participated in a live press conference on one of its most important missions ever.
Musk’s tweet comes almost exactly a year after he reached a settlement agreement with the U.S. Securities and Exchange Commission that gave the CEO freedom to use Twitter within certain limitations but without fear of being held in contempt for violating an earlier court order.
His scuffle with the SEC stretches back to Musk’s now-infamous August 7, 2018 tweet that had “funding secured” for a private takeover of the company at $420 per share. The SEC filed a complaint in alleging that Musk had committed securities fraud.
The SEC declined to comment on whether this was a violation of a settlement agreement. Tesla also did not respond to a request for comment from TechCrunch. Musk did tell The Wall Street Journal in an email that he was not joking and that his tweets were not vetted in advance, a condition in the prior agreement reached with the SEC.
Under the agreement, Musk can tweet as he wishes except when it’s about certain events or financial milestones. In those cases, Musk must seek pre-approval from a securities lawyer, according to the agreement filed in April 2019 with Manhattan federal court.
Musk is supposed to seek pre-approval if his tweets include events regarding the company’s securities, including his acquisition or disposition of shares, nonpublic legal or regulatory findings, or decisions. He’s also supposed to get pre-approval on any tweets about the company’s financial condition or guidance, potential or proposed mergers, acquisitions or joint ventures, sales or delivery numbers, new or proposed business lines or any event requiring the filing of a Form 8-K, such as a change in control or a change in the company’s directors.