Tesla’s share price closed at a price higher
than the close price last Thursday just before it was reported that the
Securities and Exchange Commission (SEC) sued Elon Musk for misleading
investors over his ‘funding secured’ post on Twitter last month. It means that
the lawsuit filed against Elon Musk by the SEC did not hurt Tesla’s
shareholders but made them several dollars richer per share. Elon Musk has
agreed to step down as the chairman for three years and pay $20 million fine,
and there will be no charge against the company. The settlement was reached
over the weekend, which surprised many people, given Elon Musk’s history in the
company's earnings call and his unpredictable temper; and the surprisingly
speed of reaching the settlement can explain today’s over 17% hike in Tesla’s
share price. However, what will happen next is more important.
Elon Musk will not be the chairman of Tesla for
three years but will remain as the CEO. This is a lesson for Elon Musk that he
cannot do whatever he wants. Given Elon Musk’s temper, it was likely he agreed
the settlement under enormous pressure from Tesla’s investors as well as his
lawyers. He had paid prices for his misbehave, but the prices were paid by
share price drops, which do not hurt Elon Musk, especially Elon Musk himself
believe his company is a sensational company which will value much higher in
the future. This time, Elon Musk definitely paid a price that hurt him that he
had to give up the chairman position of the company that is important to him.
In the future, he will not have the complete control of the company and are
likely to be more careful about his actions and words, which is good news for
Tesla and Tesla’s shareholders. However, Tesla’s value is still based on its production
and profitability.
Overall, next quarter’s earnings report is still
the key to Tesla’s market value; but if Elon Musk can learn his lesson from
this lawsuit, it will benefit the company as well as the shareholders.
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