Shares of Tesla and Twitter tumbled this week as investors dealt with concerns surrounding Tesla CEO Elon Musk and his $44 billion (Rs 34,010 crore) bid for social media Platform consequences and potential legal issues.
Of the two companies, Musk’s electric car company has fared worse, with its shares down nearly 16% so far this week to $728 (about Rs 56,300). Twitter shares fell 9.5 percent this week to close at $45.08 (about 3,500 rupees) on Thursday. Both stocks fell more than the S&P 500, which fell 4.7% for the week.
In addition to the malaise in the wider market, investors have also had to weigh the legal issues facing Musk and the potential distraction his Twitter acquisition could distract from running the world’s most valuable automaker.
The Wall Street Journal reported Wednesday that U.S. securities regulators are investigating Musk’s delay in disclosing that he has bought more than 5% of Twitter stock. Musk now owns more than 9% of the San Francisco company.
The SEC declined to comment and left a message for Musk’s lawyers.
A lawsuit filed last month by some Twitter shareholders said Musk’s stake hit 5 percent on March 14, so he should have filed a form with the SEC by March 24 disclosing that. Instead, Musk did not make the necessary disclosure until April 4, which hurt Musk. Less wealthy investors sold Twitter shares in the nearly two weeks before he disclosed his holdings and drove up the price, the lawsuit alleges.
Also on Wednesday, a federal judge in California gave a group of Tesla shareholders a major victory, unveiling his ruling that Musk wrongly and recklessly tweeted in 2018 that the deal had not yet been finalized. By then, he had secured funding to take Tesla private. The tweets drove Tesla’s stock price higher at the time.
The ruling means that jurors in the shareholder lawsuit will begin to know that a judge has ruled that Musk’s tweets were false.
In a tweet on August 7, 2018, Musk was in talks with the Saudi Public Investment Fund to fund the deal. But when Musk tweeted: “Taking Tesla private for $420 (approximately Rs 32,500) is being considered. Funding secured, Judge Edward Chen ruled that this was not final.”
Chen wrote that there was “no concrete content” for the funding of the public investment fund, and the discussions were apparently preliminary.
“There was no discussion about what the purchase price of the shares would be. There was also no discussion about what percentage of the company the PIF would own or the total amount the PIF would contribute,” Chen said in his ruling.
Musk’s lawyers are asking Chen to reconsider, arguing that they are unaware of the case in which courts have taken similar issues away from jurors. “These statements are ambiguous at best and published in a context of restricted language and informality.” Post on Twitter.”
In August 2018, tweets already landed Musk in legal trouble. The SEC brought a securities fraud charge, and Musk and Tesla settled in 2018. The two sides agreed to pay a fine of $20 million (about 1.5 billion rupees), and company lawyers will review any Musk tweets that could affect the stock price. The Securities and Exchange Commission is investigating whether Musk violated that requirement.
Musk recently lost a bid to cancel the settlement, citing violations of his First Amendment right to free speech.
Since Musk offered to buy Twitter for $54.20 (about Rs 4,200) per share on April 14, the share price has been exactly the same – $45.08 (about Rs 3,500). Analysts said that suggested investors were skeptical that the deal would go through, even though Musk had arranged financing. Shares of Twitter are up 4.3% so far this year.
However, Tesla shares have fallen 26% since the April 14 offer, in part due to fears that Musk will be swayed by the Austin, Texas-based Tesla opening two new factories and dealing with supply chain issues. distracted. Shares of the company have fallen more than 30% so far this year.
© Thomson Reuters 2022