Shares of Tesla Inc jumped 18 percent on Monday as signs it had met targets for quarterly vehicle production added to relief at Chief Executive Elon Musk's settling of a lawsuit with regulators that had threatened to force him out. Both have agreed to settle these terms without confirming or denying the allegations, leaving Musk $20 million out of pocket and required to step down as Tesla's chairman.
Shares of Tesla jumped almost 16% today after chief executive Elon Musk settled with the US Securities and Exchange Commission (SEC) over charges of misleading investors, heading off moves to force him out.
Whoever becomes the new chairperson of Tesla Motors will face the formidable task of reining in Elon Musk, the charismatic, visionary chief executive with an impulsive streak, while also helping Musk achieve his dream of turning Tesla into a profitable, mass-market producer of environmentally friendly electric cars.
Ivan Feinseth of Tigress Financial Partners, also a Tesla analyst, called the settlement "an incredibly beneficial outcome for the company", adding that while he remains neutral on the stock, he would be a buyer in the $255-$275 price range.
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Musk, a co-founder of Tesla, is the company's largest stockholder, owning approximately 22 per cent of its outstanding shares.
Musk and Tesla each will pay a penalty of US$20 million, with the total US$40-million penalties to be "distributed to harmed investors under a court-approved process".
The settlement, reached on Saturday, comes after Musk initially rejected the charges, claiming they were "unjustified".
However, in two emails - one dated September 28 and the other September 30 - Musk exhorted staffers to "ignore the distractions" and that the company was close to "proving naysayers wrong", the CNBC report said.
The SEC lawsuit charging Elon Musk with misleading investors sparked a settlement resulting in Musk hiring a new chairperson and two new, independent board members. Tesla has never reported a net profit and has been burning through cash since it was created in 2003.