Tesla stock roars back after SEC settlement
Tesla Inc. shares rebounded from last week’s U.S. lawsuit over Elon Musk’s tweets about taking the company private, as a settlement ensured the billionaire will keep calling the shots at the carmaker he’s said is on the verge of profitability.
Under the agreement with the Securities and Exchange Commission, Musk and the company each will pay a $20 million penalty, and Musk will be barred from serving as chairman for at least three years. The agency backed off from ousting him as chief executive officer.
Musk revived his rakish Twitter persona early Monday. At about 1:30 a.m., he tweeted, “Naughty by Nature” with a winking emoji and a link to a music video of the song “O.P.P.” by the rap group Naughty by Nature.
Tesla jumped 17.4 percent to close at $310.70 Monday, more than enough to offset Friday’s 14 percent plunge. The shares closed at $307.52 Thursday before the SEC announced its enforcement action over the tweets, in which Musk said he had “funding secured” to take the company private at $420 a share. He later dropped the plan of pursuing a buyout.
Now investors want to see if Tesla met its production and deliveries goals. An initial ver-
dict of feat or failure will land soon in the form of Tesla’s latest quarterly release. Musk, 47, told employees in an email Sunday that the company was “very close to achieving profitability and proving the naysayers wrong,” but still needed to execute on the last day of the quarter.
Tesla is now valued at about $51.8 billion in the stock market, taking back the title of the top U.S. automaker by market capitalization from General Motors Co. Shareholders are betting the company is on the cusp of stemming losses and cash burn thanks to its lowerpriced Model 3 sedan.
Short sellers, meanwhile, have targeted the company, saying it needs to raise billions of dollars more in financing, has woeful quality control and is run by an erratic CEO.
Tesla’s most active high-yield bond issue traded up 2.5 cents to 86.75 cents on the dollar early Monday, the biggest gain since Aug. 2.
The electric-car maker has applied to the city of Fremont, to build a 4,000-square-foot tent where vehicles will be wrapped in protective material for transit, according to a permit application filed last month.
In June, Tesla built a general assembly line for the Model 3 sedan underneath a massive outdoor tent near its Fremont vehicle factory’s paint shop. The move was widely derided by automanufacturing experts but played a key role in boosting production beginning late in the second quarter.
The wrapping tent may address a criticism lobbed at the company by some of the short sellers who Musk has publicly expressed a desire to “burn.” Bearish investors have been circulating images of parking lots packed with Tesla vehicles that are uncovered and exposed to the elements as the carmaker has been going through what Musk has coined on Twitter to be “delivery logistics hell.” Unwrapped Tesla vehicles have also been photographed on trailers that are transporting them to stores.
An army of Tesla owning volunteers swooped in over the weekend to help deliver cars to new buyers while Musk cheered on his employees, telling them in emails to “ignore all distractions” and that they were on the cusp of “an epic victory beyond all expectations.”
In the Chicago suburb of Highland Park, more than 75 people crammed into Tesla’s service center and 50 or so more waited outside. In the Los Angeles community of Marina del Rey, a steady stream of customers arrived while tractor trailers pulled in to unload vehicles that had been stored in Burbank. In Coral Gables, Fla., a showroom attendant who asked not to be named said deliveries were scheduled hour-by-hour to avoid congestion.
It wasn’t immediately clear how many outlets across the U.S. were doing record volume.
Others were so busy that volunteers showed up to help staff out. Andrew Doane, who has a Model S sedan, Model X crossover and Model 3 car and is president of the Tesla Owners Club of the Mid-Atlantic region, mustered club members to pull shifts at delivery hubs in Virginia and Maryland, and worked one himself.
“This weekend is the pivot point,” he said, describing it as a watershed moment not just for the company, but also for the shift away from the internal combustion engine.
After repeatedly falling short of its manufacturing targets, Tesla probably produced about 53,457 Model 3s in the third quarter, according to a Bloomberg Tracker that uses vehicle identification numbers and other inputs to estimate output in real time. That’s above the Wall Street consensus of 50,416 — the average estimate of five analysts polled by Bloomberg — and toward the high end of Musk’s July forecast of between 50,000 and 55,000 Model 3s.