Here we are again. Billionaire innovator and industry inventor Elon Musk is being pilloried in the headlines this week… and he may face even worse from the Securities and Exchange Commission for, allegedly, committing fraud. The allegations and negative headlines have to do with tweets Musk published back in August which insinuated he may be considering taking Tesla private, and that he had “secured funding” for this endeavor.
That single tweet sent the stock on a roller coaster ride that has lasting the intervening weeks. Recently, though, with the announcement of an SEC investigation, Tesla stock plummeted 10 percent. Worse, sources have leaked to the media that the company “expects to be sued” though no details of that potential lawsuit are yet available.
This uncertainty, mixed with the specter of real action by the SEC, turns what had been a mostly positive year for Musk and Tesla into a more foreboding situation. Some are openly wondering if, maybe, Musk needs to step away from his position of CEO and focus more on something else.
These rumblings began shortly after Musk got in a twitter spat over a rescue sub he offered to help with the retrieval of a trapped soccer team. The rescue operation was already international news, when Musk stepped in. His offer of a sub was initially kindly turned down, but the subsequent public argument ended very badly for Musk, from a public relations standpoint.
Musk’s latest brush with Twitter infamy did not go much better. When challenged on the price point – $420 per share – being slightly inflated, the SEC says Musk responded by saying “he had recently learned about the number’s significance in marijuana culture and thought his girlfriend would find it funny… which is not a good reason to pick a price.”
No, it is not. And, you can bet the people at the SEC are not laughing. Neither are Tesla stockholders or fans of the vehicles, many of whom are growing increasingly dissatisfied with Musk’s behavior and decorum over the past few months.
Behind the closed doors of the Tesla boardroom, the leadership looked at a private takeover proposal, but the CEO eventually squashed the notion in late August. Now, though, Musk if facing tough questions from a regulatory body not known for its sense of humor in matter related to stock pricing.
Whatever happens next in this situation, questions about Musk’s mental state and fitness are not going to dissipate any time soon. These are questions the company – and the CEO – will eventually need to address.