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Uncertainties about SEC Deal Take Tesla Stock to Six-Month Low

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Oct. 8 2018, Published 6:33 p.m. ET

Tesla stock

On October 8, Tesla stock (TSLA) slipped for the fifth consecutive session. At 1:10 PM EST, the stock was at its six-month low of $249.15, a 4.9% loss from the previous session’s closing price. If the stock price closes near the $249.15 level today, it would mean ~19.8% losses in the last five sessions. As of October 5, TSLA had already lost 15.9% YTD (year-to-date). By comparison, auto players (XLY) General Motors (GM), Ford (F), and Fiat Chrysler (FCAU) fell 16.8%, 26.2%, and 2.6% YTD, respectively.

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Uncertainties about the SEC deal

On October 4, Tesla CEO Elon Musk, in a series of tweets, mocked the Securities and Exchange Commission, calling it “the Shortseller Enrichment Commission.” Musk’s tweet surprisingly came hours after a federal judge ordered Musk and the SEC “to justify their securities fraud settlement,” Reuters reported. Musk tweeted, “Just want to that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!”

According to Steven Peikin, co-director of the SEC’s Enforcement division, Tesla’s board needs to “adopt important reforms —including an obligation to oversee Musk’s communications with investors” as a part of this settlement offer.

Musk is difficult to contain

On October 8, CNBC quoted Alma Angotti, a former SEC enforcement attorney, saying, “The judge may have real concerns Tesla won’t be able to do anything about his tweets, and social media is difficult to pre-clear or approve in advance unless he’s willing to cooperate.”

This news further fueled investors’ uncertainties about the SEC’s settlement deal with Musk and drove TSLA stock lower on Monday. However, it’s important to note that the possibility of Musk’s successful settlement deal with the SEC can’t be ruled out completely at this point.

On Friday, October 5, Tesla stock fell sharply. Read TSLA Is Down 6.8%: Are Investors Overreacting to Musk’s Tweets? to learn more.

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