In the previous part of this series, we looked at the electric carmaker Tesla (TSLA) and CEO Elon Musk’s fresh troubles. The SEC seems to be preparing to charge Musk for violating the previous SEC-Tesla settlement. In September 2018, a settlement came after the regulatory body charged Musk with securities fraud for misleading tweets. Back then, his tweet saying “taking Tesla private at $420, Funding secured” led him into legal trouble. Now, let’s move on by looking at investors’ reaction to the SEC’s fresh allegations against Elon Musk.
Tesla investors react
On February 25, Tesla stock rose 1.4% from its previous session’s closing price to settle at $298.77, which was the second consecutive day that Tesla stock witnessed a minor recovery after falling for the previous three sessions. However, the news about the SEC seeking contempt charges against Elon Musk, which came after market close on Monday, triggered a sell-off.
In the after-hours trading session on Monday, TSLA fell by 4.6% to $284.95. Investors’ fear that this time the SEC might take stricter legal action against the company’s CEO hurt their sentiment.
On a YTD basis, Tesla stock has underperformed the broader market. As of February 25, TSLA was trading with 10.2% YTD losses against 11.5% and 13.9% gains in the S&P 500 Index and the NASDAQ Composite Index, respectively. Meanwhile, General Motors (GM), Ford (F), NIO (NIO), Toyota (TM), and Honda (HMC) have risen 20.0%, 14.5%, 41.3%, 5.5%, and 7.3% YTD, respectively.
Continue to the next part where we’ll discuss what options Elon Musk might have after the SEC’s fresh allegations.