Tesla shares rise 17% after ‘naughty’ Elon Musk settles with SEC (2024)

Elon Musk’s decision to give up the chairmanship of Tesla and pay a fine to the US financial regulator provided a much-needed jolt to the company’s share price yesterday, lifting it by nearly a fifth.

Shares in Tesla rose by more than 17 per cent yesterday, making up the ground they lost on Friday after it emerged that Mr Musk had been charged by the US Securities and Exchange Commission.

Mr Musk settled fraud charges with the SEC over the weekend and also said that Tesla is close to becoming profitable.

The SEC charges were prompted by his announcement on Twitter that he wanted to take the electric vehicle group private and had secured funding.

Mr Musk had been accused of misleading the stock market and hurting investors by tweeting in August. The SEC sought to remove him from leading Tesla with a ban on him working as an officer or director of a public company.

However, the regulator said on Saturday that Mr Musk, 47, had settled the charges, agreeing to pay a $20 million penalty, to give up his chairmanship of Tesla for three years and to have the company sign off on any potentially market-moving tweets. He will remain as Tesla’s chief executive.

In a memo to staff at the weekend, Mr Musk said: “We are very close to achieving profitability and proving the naysayers wrong, but to be certain, we must execute really well tomorrow,” referring to the end of Tesla’s third quarter on Sunday. “If we go all out tomorrow, we will achieve an epic victory beyond all expectations. Go Tesla!!”

Tesla shares closed yesterday at $310.81, up 17.4 per cent. They had closed at $307.52 on Thursday last week, before the SEC charges were filed, and at $264.77 on Friday.

Mr Musk posted a tweet yesterday saying “Naughty by Nature” with a link to a music video by the American hip-hop group of the same name.

On August 7, Mr Musk, who is estimated to be worth nearly $22 billion, most of which is tied up in Tesla had announced on Twitter that he had “funding secured” to take Tesla private at $420 per share, in what would have been the largest buyout of its kind. Little more than two weeks later he said that he had abandoned the plan.

Tesla will pay a separate $20 million fine for breaking rules on disclosures to investors. It also will establish a new committee of directors and will appoint two new independent board members. Neither Mr Musk nor Tesla admitted or denied the SEC charges.

On Thursday Mr Musk rejected a settlement with the SEC under which he would have been forced to pay a $10 million penalty. That led to the regulator filing charges that evening and doubling his fine by the time he had changed his mind about a settlement.

• Aston Martin has indicated that its stock market flotation tomorrow could value the company at £4.5 billion (Robert Lea writes). Its stockbrokers received bids for the 25 per cent of the company they are trying to sell on the first day of an investor roadshow last week, City sources said. Following that, the company has tightened the price range for the debut of its shares from the original £17.50 to £22.50 to a new setting of £18.50 to £20. That would value the company at between £4.25 billion and £4.5 billion.

The float will make Aston Martin Lagonda the first quoted car company in London in 28 years after the takeover of Jaguar by Ford. It is understood that much of the demand is coming from American investors. At £4.5 billion, Aston Martin would be valued at 22 times present pre-tax earnings.