Tesla's stock falls 11% after SEC sues Elon Musk

Tesla's stock tumbled Friday morning after the SEC sued Elon Musk for misleading investors.Musk tweet...

Posted: Sep 28, 2018 1:08 PM
Updated: Sep 28, 2018 1:08 PM

Tesla's stock tumbled Friday morning after the SEC sued Elon Musk for misleading investors.

Musk tweeted on August 7 that he had secured funding to take Tesla private at $420 a share. Typically, stocks match takeover prices that a company publicizes. Investors assume the deal will be completed and the company will eventually be worth the price at which the company says it will be sold.

However, skeptical investors never believed Musk, and the stock never approached anything close to $420 a share. It rose as high as $387.46 on August 7 and tumbled since then.

Their skepticism was for good reason: Musk had never secured the funding, the SEC alleges. He abandoned the plan to go private three weeks after he first tweeted about it.

The stock fell as low as $265 after the bell Thursday, 14% below Tesla's closing price for the day. Including the off-hours plunge, Tesla's stock has plummeted more than 29% since Musk's infamous tweet.

Tesla's falling stock price could come back to haunt the company. Tesla is burning through cash to build expensive plants and cars, but it badly needs that money to pay about $1 billion in debt by February 2019. Most of that would convert to stock if Tesla's price holds above $360 — but that seems unlikely.

If Tesla needs to pay back its debt with cash — and if the company lacks the cash to pay it — Tesla could raise the money by issuing more debt or stock. But that could further deflate its stock price, depressing the amount of capital the company has to spend on new infrastructure to build cars.

Musk has denied that the company faces a cash crunch. He says increased Model 3 sales will generate enough cash to finally make Tesla profitable in the second half of 2018.

The SEC's lawsuit could cause other problems for Tesla.

The agency has asked a federal judge to prevent Musk from serving as an officer or a director of a public company, among other penalties.

That's a serious concern for Tesla, which Musk built from scratch into a multibillion-dollar company. He's the carmaker's chairman and CEO.

Huntsville
Few Clouds
71° wxIcon
Hi: 84° Lo: 66°
Feels Like: 71°
Florence
Clear
70° wxIcon
Hi: 86° Lo: 66°
Feels Like: 70°
Fayetteville
Clear
57° wxIcon
Hi: 83° Lo: 64°
Feels Like: 57°
Decatur
Clear
69° wxIcon
Hi: 85° Lo: 66°
Feels Like: 69°
Scottsboro
Overcast
68° wxIcon
Hi: 84° Lo: 64°
Feels Like: 68°
WAAY Radar
WAAY WAAY-TV Cam
WAAY Temperatures

Alabama Coronavirus Cases

Confirmed Cases: 18018

Reported Deaths: 644
CountyConfirmedDeaths
Mobile2239116
Jefferson1837102
Montgomery171040
Tuscaloosa78315
Marshall6939
Franklin5567
Lee54833
Shelby51720
Tallapoosa42765
Butler41118
Chambers35525
Walker3542
Elmore3548
Madison3394
Baldwin2909
Morgan2801
Dallas2723
Etowah25711
DeKalb2483
Lowndes24612
Coffee2361
Sumter2247
Autauga2214
Houston2204
Bullock2095
Pike2030
Colbert1842
Hale1739
Russell1710
Marengo1706
Barbour1671
Lauderdale1642
Calhoun1603
Choctaw1538
Wilcox1487
Clarke1442
Cullman1430
Randolph1277
St. Clair1231
Marion12211
Pickens1164
Dale1150
Talladega1135
Limestone1060
Chilton1011
Greene944
Winston900
Macon824
Henry802
Covington801
Jackson782
Crenshaw753
Bibb751
Washington706
Escambia633
Blount621
Lawrence500
Geneva430
Conecuh411
Coosa401
Monroe402
Perry390
Cherokee373
Clay272
Lamar260
Fayette160
Cleburne151
Unassigned00

Tennessee Coronavirus Cases

Confirmed Cases: 22566

Reported Deaths: 364
CountyConfirmedDeaths
Davidson504062
Shelby4943111
Trousdale13924
Rutherford119623
Sumner88145
Hamilton79415
Bledsoe6071
Williamson55210
Putnam4795
Robertson4653
Tipton4423
Out of TN4184
Lake4140
Wilson4078
Knox3755
Bedford2834
Montgomery2693
Rhea2100
Hardeman1960
Madison1752
Loudon1430
McMinn14114
Macon1363
Cheatham1230
Bradley1221
Fayette1152
Cumberland1121
Dickson1090
Unassigned920
Blount913
Maury890
Sevier812
Washington750
Coffee730
Wayne640
Gibson631
Monroe622
Sullivan602
Hickman580
Lauderdale561
Franklin531
Greene502
Dyer500
Marion401
Anderson401
DeKalb370
Hamblen362
Smith341
White330
Hawkins332
Lawrence310
Grundy311
Haywood312
Marshall311
Obion301
Henry300
Jefferson280
Carroll271
Overton260
Meigs260
Weakley260
Lincoln250
Warren230
Cannon210
Perry210
Cocke200
Carter191
Campbell181
Morgan170
Jackson170
Crockett162
Roane160
Polk160
Johnson160
Henderson150
Hardin152
Sequatchie150
Humphreys131
Fentress120
McNairy120
Chester120
Giles120
Scott120
Stewart110
Claiborne90
Houston80
Grainger80
Clay70
Benton71
Decatur50
Unicoi40
Union40
Van Buren40
Lewis30
Pickett30
Moore30
Hancock10

 

 

Community Events