Remember when Tesla shares tanked by 10% moments after its CEO Elon Musk tweeted: “Tesla stock price is too high imo”?
Turns out it was the “final straw” for a group of Tesla shareholders, who’ve used the fiasco as leverage in a potential lawsuit that seeks to stop the enigmatic billionaire from tweeting any information at all regarding the company moving forward.
According to AP, their lawyers have argued that Musk’s continued tweeting poses a direct threat to Tesla, and that his May 1 post breached conditions of a 2019 settlement with the Securities and Exchange Commission (SEC) — which demand any tweet which might affect the value of Tesla stock be reviewed by another person before they go live.
“No rational Tesla lawyer or director could have approved this tweet,” wrote the plaintiffs. “Musk clearly is unwilling to comply with the SEC settlements, and the board is equally unwilling or unable to require him to do so and constrain his tweeting.”
The attorney defending Tesla’s directors responded by highlighting that the stock price crash suffered by Tesla in the wake of Musk’s ‘too high imo’ tweet lasted less than one full business day, implying any damage to shareholders was minimal.
He also reportedly posited that banning Tesla’s CEO from tweeting about his own electric vehicle company could breach the First Amendment, which protects freedom of speech.
This echoes what Musk said on the matter during a related 60 minutes interview.
Judge says its unlikely that Musk’s tweets tanked Tesla stock
On Tuesday, Delaware judge Joseph Slights ruled that Musk’s ‘stock price too high imo’ tweet was “troublesome on its face,” but just one of many questionable posts over a year that has seen incredible growth for Tesla stock.
He’s right: despite the “red pill” bullshit, unusual baby name, and newly-found lust for shedding material possessions, Tesla’s share price is still through the roof — up more than 430% since May 2019, even after the coronavirus pandemic laid waste to stock markets.
However, AP noted that Slights said he could revisit his decision if Musk’s Twitter usage results in “likely” harm to Tesla shareholders. So far, he reckons the allegations put forward have been simply speculation, but will continue to keep the case on hold.
“The decision will be clearer if more of a pattern emerges, especially an unchecked pattern […]. At this point, though, what’s done is done,” Slights concluded.
That sure sounds a lot like “boys will be boys” to me.
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