Fears high price losses: Tesla investor is suing Musk over tweets

Saturday March 13th 2021

Feared of high price losses
Tesla investor is suing Musk over tweets

Time and again Elon Musk causes a stir and price fluctuations on the stock exchanges with his tweets. An investor is now suing the Tesla boss. The reason: Musk expose the automaker with his Twitter messages to the risk of high price losses.

Tesla boss Elon Musk has once again caused legal trouble with his tweets. An investor in the US electric car maker has sued the multibillionaire for "erratic" Twitter messages that allegedly exposed the company to high legal risks and billions in price losses. Further unbridled tweets from Musk could have dire consequences for Tesla's future funding opportunities, according to the 105-page complaint published on Friday (local time) by the court in the US state of Delaware.

Musk repeatedly causes a stir with his tweets and sometimes also for strong movements in the financial markets. Most recently, he had fueled the price rallies of crypto currencies such as Bitcoin and Dogecoin with benevolent messages in the short message service. This caused a lot of suspicion, not least because a little later a $ 1.5 billion Bitcoin purchase by Tesla became known, for which it is not clear whether it was made before or after the tweets.

The whole thing is particularly explosive because Musk has already been sanctioned by the Securities and Exchange Commission in the past. An agreement with the authority stipulates that the Tesla boss must have his tweets approved by the company. The trigger for this was Musk's announcement on Twitter in the summer of 2018 that he was considering taking Tesla off the stock exchange and financing was secured. After an investigation, the SEC concluded that Musk had no firm funding commitments and ultimately enforced Twitter's restrictions on a settlement after a legal hack and a market manipulation lawsuit.

Tesla's shares rose 700 percent in 2020

But Musk mocked the SEC afterwards and continued to tweet happily. In May 2020, for example, Musk dropped Tesla's stock by more than ten percent in a single trading day in a series of weird tweets. At the time, he wrote, among other things, that he thought the company's market value was too high and announced that he would want to dispose of almost all physical possessions. This is only one of the incidents that are now explicitly mentioned in the lawsuit – this alone "destroyed" almost $ 14 billion in market value.

One thing is certain: Musk has already posted many bizarre tweets, on April 1, 2019, for example, he posted a joke photo about a Tesla bankruptcy. In view of the recent successes and the stock market development of the e-car pioneer, the investor's lawsuit may seem bold – Tesla's shares rose by around 700 percent last year, and Musk's group is by far the most valuable car manufacturer worldwide on the capital market.

Recently, however, things went downhill again, with the price dropping by 15 percent last month. Because Tesla and its supervisory bodies allegedly did not bring Musk to reason when tweeted as ordered by the SEC, the lawsuit is also directed against the company and its board of directors.