Over the past 24 hours, Elon Musk has been the subject of heavy public spotlight thanks to a lawsuit that accuses the billionaire of defrauding stockholders with said Tweet. Musk told the SEC that the lead representative of the fund told him he would be fine with reasonable terms for a go-private deal.
Musk will have to explain to a court why he announced on social media that he had investors who would take Tesla private at a share price of $420.
According to the SEC filings, Musk said that calculation resulted in a price of $419, which he rounded up to $420 "because he had recently learned about the number's significance in marijuana culture and thought his girlfriend 'would find it amusing, which admittedly is not a great reason to pick a price'". "Integrity is the most important value in my life and the facts will show Inever compromised this in any way", the statement said.
The SEC said Tesla's head of investor relations responded thusly: "I can only say that the first tweet clearly stated that "financing is secured". But Musk also could agree to step down as CEO and instead take another title, such as chief production officer.
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"We allege that Musk had arrived at the price of $420 by assuming a 20 percent premium of what Tesla's then existing share price (was), and then rounding up to $420 because of the significance of that number in marijuana culture, and his belief that his girlfriend would be amused by it", said Peikin during the conference. Musk has blamed short-sellers, investors betting on a collapse in a company's share price, for Tesla's woes. According to CNBC, Musk could not accept that deal. But after Musk's lawyers turned it down Thursday, the sources said, the agency "rushed to pull together" the complaint they filed that afternoon.
Gene Munster, managing partner at venture capital firm Loup Ventures, said the lawsuit adds further distraction at a critical six-month juncture in the company's viability.
The SEC also alleged Musk's tweets caused market chaos and investor harm.
The 47-year-old billionaire entrepreneur has been directly involved in nearly every detail of Tesla's product design and technology strategy, and is credited as the driving force behind the loss-making company's ability to raise capital.
"The point is, there's always this carrot that Elon Musk is dangling out in the future of something that is going to take this company to nirvana, if you will, and he consistently misses it", he said. The department of justice too is now looming into Musk's tweets and could bring a criminal case if it finds he deliberately misled investors.
"I think it was a big mistake to turn down the settlement offer", CFRA analyst Garrett Nelson said.