Monday, November 8th, 2021
Tweet destroys billions
Musk is in trouble
By Jan Gänger
Given the crash in Tesla shares, the US Securities and Exchange Commission should have a few questions for Tesla and Elon Musk. Because of its Twitter, many billions of dollars vanished into thin air within a short period of time.
Elon Musk reduced Tesla’s market value by billions of dollars – via tweet. At the weekend, the Tesla boss had a vote on Twitter whether he should sell a tenth of his huge block of shares in order to pay taxes. After the resounding “yes” it should only be a question of time. Musk promised to obey the vote. As a result, the share price rushed into the basement. And the US stock exchange regulator – like many Tesla shareholders – should not be pleased.
Many investors took Musk’s tweets very seriously as a sales announcement and parted ways with their papers. In New York it went down by 9 percent at times, meanwhile the Kurts has stabilized at a minus of almost 6 percent. The world’s richest person holds 23 percent of Tesla. That means: In the next few months, more than two percent of all Tesla shares can come onto the market. And that should put the course under pressure.
The background: A stock option that Tesla Musk granted around nine years ago will expire in August next year. He can buy nearly 23 million shares of Tesla at $ 6.24 each. With a Tesla share now costing more than $ 1,100, this is an extremely lucrative opportunity that Musk would gross nearly $ 25 billion as things stand. However, he would have to pay more than $ 13 billion in taxes.
Musk has to submit tweets
Billions of dollars have vanished into thin air when the share price slipped. On Friday evening, Tesla was worth around $ 1.23 trillion after the US market closed. A price slide of only one percent would destroy $ 12.3 billion.
Therefore, Musk is now threatened with trouble with the US Securities and Exchange Commission. It had put the Tesla boss in his place three years ago when he speculated on Twitter about taking Tesla off the stock exchange by buying up all its shares. The financing is secured. That was a joke, though, and it sent Tesla shares on a roller coaster ride and made some investors really angry.
According to the SEC, Musk had misled investors. In order to avoid a penalty, he accepted conditions. One of them requires that he first let the company approve tweets that could have an impact on the share price. Therefore, the SEC is likely to see an urgent need to talk to both the multibillionaire and the company’s supervisory board when tweets about stock sales.