A tweet in August sent by Elon Musk has cost the entrepreneur dearly.
Elon Musk and his infamous tweet from August has now cost the billionaire $40 million and so much more.
The “420 tweet”, in which CEO Musk teased at plans to take Tesla private, led to the US Securities and Exchange Commission (SEC) charging Musk with securities fraud.
“Am considering taking Tesla private at $420. Funding secured, ” Musk said. “Shareholders could either to sell at 420 or hold shares & go private.”
Obviously, this tweet caused Tesla stock (TSLA) to fluctuate greatly. These volatile movements were further perpetuated by small groups of (TSLA) investors confirming that several meetings did indeed take place wherein Tesla CEO, Elon Musk discussed taking the company private.
If (TSLA) reached $420 a share it would value the innovative automaker at roughly $70 billion, far beyond its current market cap of $45.1 billion.
Allegedly the $420 price target was no more then an “inside joke” between Elon Musk and his girlfriend, musician Grimes. According to reports he used the $420 price target to amuse her.
Musk then emailed Tesla (TSLA) employees, commenting on the volatility:
“As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders. Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term.
Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company.”
No matter the reasoning behind a wish to take the automaker private, the way in which Musk made his announcement caused SEC to act.
Regardless of the motivation to take Tesla private the way that Elon Musk chose to announce the intention of the company caused the SEC to act.
Last week, the commission charged Musk with securities fraud over his public tweet, claiming that the executive made “a series of false and misleading tweets” over the company’s future.
Last week the SEC charged Elon Musk with securities fraud over his “420 tweet”, claiming that Musk made “a series of false and misleading tweets” over (TSLA)’s future.
The SEC stated on Thursday (9/27/2018) that “Musk had not discussed specific deal terms with any potential financing partners, and he allegedly knew that the potential transaction was uncertain and subject to numerous contingencies.”
In addition, the tweet “led to significant market disruption,” according to the commission.
Over the weekend, SEC settled with the Tesla CEO, charging Musk $20 million and Tesla a further $20 million.
Over the weekend (9/28 – 9/30) Elon Musk settled with the SEC, charging the Tesla CEO $20 million personally and an additional $20 million to (TSLA) directly.
The SEC said Musk has not admitted or denied the allegations but has agreed to step down as Tesla’s Chairman and will not seek re-election for at least three years.
Tesla will appoint an independent chairman to replace Elon Musk, and will further appoint an additional two directors.
In addition, SEC has insisted on some new measures of control over the CEO in the future through “a new committee of independent directors and additional controls and procedures to oversee Musk’s communications.”
The $40 million fine will be “distributed to harmed investors under a court-approved process,” SEC says.
“As a result of the settlement, Elon Musk will no longer be chairman of Tesla, Tesla’s board will adopt important reforms — including an obligation to oversee Musk’s communications with investors-and both will pay financial penalties,” said Steven Peikin, co-director of the SEC’s Enforcement Division. “The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders.”
Analyzing 2 Big Ride-Hailing Stocks: Uber Or Lyft
This year has been the year of tech initial public offerings and two of the biggest ones so far this year have belonged to ride-hailing companies, Uber (UBER) and Lyft (LYFT). The IPOs were highly anticipated but both companies had been disappointed in the reception they got from the market. In fact, both went below their listing prices, but eventually, both stocks have proven to be gainers.
In this regard, it would be interesting to see how the two stocks match up and which of Uber or Lyft could be a better investment in the ride-hailing space.
Uber Technologies (UBER)
First and foremost, Uber (UBER) is a far bigger company when compared to Lyft and has a massive presence in some of the most lucrative markets in the world. Uber’s revenues grew by 14% in the first quarter this year and touched $3.1 billion.
Meanwhile, gross bookings during the quarter saw as much as $14.6 billion. The gross bookings rose by 34%. On top of that, analysts estimate that Uber users are going to spend a jaw-dropping $60 billion this year.
Lyft Inc. (LYFT)
On the other hand, Lyft (LYFT) presents an interesting dilemma for investors. While it is a far smaller operation, with smaller revenues, the company is growing at a fast rate than Uber. In the first quarter of 2019, the company’s revenues grew by as much as 95%.
However, the company projects the revenue growth for the whole year to be in the 52% to 53% range. Additionally, it does not have the added distraction of Uber Eats to contend with. As a conclusion, it needs to be pointed out that while Uber will continue to grow into a behemoth, Lyft can only hope to make smaller dents into its market share. Therefore, Uber may be a stronger company at this point.
Moreover, if Uber can manage to turn Uber Eats into a profitable food delivery business then the company could grow even further.
Tesla Stock Bounces Back The Recent Slump, What Next?
Electric vehicle major Tesla Inc (TSLA) has not had a particularly great time at the beginning of the year as total deliveries dropped to a disappointing 63,000 and there were fears that the company would struggle for the foreseeable future. However, the company has managed to turn things around in the second quarters and deliveries have picked up again in North America.
Best Ever, Quarterly Delivery?
According to most estimates, Tesla is all set to beat its best-ever quarterly delivery record by hitting 90,700 deliveries in the second quarter. That record had been touched back in Q4 2018. Although it might appear that the company has managed to shake off its disappointing performance in the first quarter, experts believe that Tesla is not completely out of choppy waters yet.
The company’s charismatic Chief Executive Officer Elon Musk had earlier stated that the showing in the 1st quarter was a minor bump and he expected deliveries to improve significantly. Wall Street analysts agree as well and JMP Securities has stated that Tesla registered more Model 3s in April and May than the entirety of the first quarter. However, there are some factors that have had an effect on the delivery figures.
It has emerged that as many as 10,600 vehicles were already on their way to be delivered to customers towards the end of the first quarter but the deliveries were actually made in April. Additionally, Tesla also started delivering its cheaper version of the Model 3 that is priced at $35,000 and that also produced a significant bump in orders.
That being said, it is also important to note that Tesla would not be able to deliver the Model 3 for $35,000 for long since the changes in subsidies provided by the government are going to drop. The tax credit for purchasing a Tesla dropped to $3750 from $7500 at the beginning of 2019 and on 1 July, it will drop by another 50%. In such a situation, it will be interesting to note how the company can keep up the numbers.
Last but not least, the company’s deliveries in China has also declined significantly and the trade tensions are also going to have an effect on Tesla’s business in one of the world’s biggest electric vehicle markets.
Tesla’s stock has bounced back almost 20% in a week from its 52-week low of $176.99.
Like This Article? Check Out How This Technology Could Become A Global Phenomenon
One Name, Two Trucks; Tesla vs. Nikola Motors
I’ll recount to you a scene from one of my favorite movies of all time if that’s alright. The film, in question, is David Fincher’s “The Social Network,” a biographical drama about the founding of Facebook (FB) and the accompanying legal journey Mark Zuckerberg endures after the idea is born. In the scene, Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra are planning to sue Zuckerberg for allegedly stealing the source code and design of their site, ConnectU, formally known as The Harvard Connection. Zuckerberg had verbally acknowledged helping his new partners with their site but ended up putting all his efforts into Facebook (FB) at the time. The films go on to detail Zuckerberg’s life and eventual major success with his social media platform, but not before showing audiences that he paid the Winklevoss team millions in settlements.
The film immortalized Mark Zuckerberg as a cultural tech icon, but also depicted the Winklevoss Twins as the guys who didn’t wise up in time. American trucking startup Nikola Motor Company, though not created in retaliation of a colleague who stole their idea, is wise to the country’s desire for environmentally conscious forms of transportation.
Nikola Motor, named after the famous Serbian-American inventor Nikola Tesla, was founded in Utah to manufacture and distribute electric vehicles for consumers. You can already guess, at least by their name and entire company mission, who their biggest competitor is. If you can’t, we may need to sit down and have a long talk, son.
Back in 2016, Nikola Motor announced its two initial vehicle offerings; The Nikola Zero, a utility terrain vehicle (UTV) with a max range of 125 miles, not necessarily bringing the electric heat for auto enthusiast and the Nikola One, a semi-truck that’ll get’er done in 1,200 miles or less. Two years have gone by and that other company named after Nikola, Tesla (TSLA) and its CEO Elon Musk, have peaked the curiosity of environmentalists and car owners the world over. In recent news, Tesla (TSLA) has testing and debugging their advanced driver assist system, known as Autopilot. The system, according to tech experts, uses a host of cameras and sensors enabling the car to essentially drive itself.
Over at the first-name truck company, Nikola Motors, the company announced on Tuesday that a third generation version of their semi-truck, the Nikola Tre, will have a hydrogen-electric fuel cell generating 1000 horsepower, and will begin global production in 2023.
“This truck is a real stunner and long overdue for Europe. It will be the first European zero-emission commercial truck to be delivered with redundant braking, redundant steering, redundant 800Vdc batteries, and a redundant 120 kW hydrogen fuel cell, all necessary for true level 5 autonomy.”
–Trevor Milton, Founder and Chief Executive Officer, Nikola Motor Company
Compared to Tesla’s (TSLA) semi which boasts a 500-mile range on an electric battery, Nikola Tre will run solely on hydrogen. According to the company’s official press release, they are currently partnered with Nel Hydrogen, a hydrogen production solutions company based in Norway, to create 700 hydrogen stations across the US and Canada by 2028. This will allow truck drivers operating Nikola Tre vehicles to refuel with ease as they transport goods along the highways and roadways of the country.
“Nel has been good to work with for our USA station design and rollout. We will work with Nel to secure resources for our European growth strategy. We have a lot of work ahead of us, but with the right partners, we can accomplish it.”
–Kim Brady, Chief Financial Officer, Nikola Motor Company
Search Stock Price (StockPrice.com)
Sponsored Content2 days ago
Special Delivery! On-Demand Tech Companies Hit Billion-Dollar Valuations; Here’s How Investors Can Capitalize In The Market
Featured3 months ago
Multi-Trillion Dollar Industry Providing Massive Opportunity in 2019 & Beyond
Cannabis2 months ago
Two Massive Growth Industries, One Choice for Investors
Featured3 days ago
This New Technology Could Transform A Multi-Billion-Dollar Industry!
Biotechnology2 weeks ago
Big Investments Are Signaling The Green Light For A ‘Hot Market’ With Cancer-Fighting Stocks
Cannabis3 weeks ago
A New Cannabis Trend That The Market Should Take Immediate Notice Of Is Here!
Featured2 months ago
Opportunity Ahead for This Healthcare Stock
Stock Market Breaking News4 weeks ago
Liberty Defense (SCAN.V) Signs MOU with the Utah Attorney General for Testing of HEXWAVE