Tesla shares spike on SEC truce, strong Model 3 report
Shares of Tesla jumped as much as 17 percent on Monday as Elon Musk settled a lawsuit from federal regulators and a report said the company has hit its quarterly production targets.
The electric car maker cranked out 80,000 vehicles during its third quarter, pushing out the final 2,000 during a two-day blitz over the weekend, according to Electrek, an auto news site.
The total included 53,000 Model 3 sedans — hitting the middle of its earlier promise to deliver between 50,000 and 55,000, the site reported Monday.
Tesla is expected to give an update on its car production as soon as Tuesday.
Tesla shares plunged last week after the SEC accused Musk of securities fraud over his now-infamous “funding secured” tweet last month, which falsely claimed he’d lined up backing to take Tesla private.
Under a settlement reached this weekend, Tesla and Musk will pay $20 million each to the securities regulator and Musk will step down as chairman but remain as chief executive.
“We believe Musk’s settlement with the SEC is positive for all stakeholders and should allow TSLA to return its focus to producing quality cars,” Baird analyst Ben Kallo said.
Shares of the company recently were up 16 percent at $307.11.
Lawyers say the settlement and size of the fine may give more ammunition to short-sellers pursuing separate cases against Musk for manipulating the company’s shares as well as to a probe by the Justice Department.
But several experienced litigators said Monday that, while the DOJ probe is separate, the SEC’s settlement could mark the end of official action against Tesla and Musk.
“The standard of proof for any potential criminal charge is higher than that of a civil case, which the SEC had,” said Jay Dubow, a former branch chief in the SEC’s enforcement division.
“It is possible that the DOJ investigation does not result in any criminal charges at least in part because the DOJ could determine that the SEC’s action resolved the matter and that no further governmental action is required.”
Musk, whose tweets on Aug. 7 on a plan to take Tesla private that was later abandoned, has been barred from tweeting about Tesla without the permission of a company lawyer. Musk tweeted only once since the settlement was announced — posting a music video by rap group Naughty by Nature.
“We are very close to achieving profitability and proving the naysayers wrong, but, to be certain, we must execute really well tomorrow (Sunday),” Musk wrote in a mail to employees on Saturday.
As part of the settlement, Tesla will appoint an independent chairman, two independent directors, and a board committee to set controls over Musk’s communications under the proposed agreement.
“The new independent chairman and board members should dramatically improve corporate governance and widen the pool of potential investors,” Baird’s Kallo said.
With Reuters