The Securities and Exchange Commission investigation into Tesla (TSLA) Chief Executive Elon Musk’s tardy disclosure of his growing Twitter stock holdings in April 2022 could land him in more hot water with regulators. Actions could include asking a court to bar the billionaire from serving as an officer or director of a public company, according to the Wall Street Journal. TSLA shares surged Monday.
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The Wall Street Journal reported Monday that Musk waited to disclose his Twitter stake until he owned more than 9% and had an offer to join its board, according to court documents. This appears to violate a rule that required him to reveal his ownership once it passed 5% of Twitter shares. In April 2022, Musk disclosed his Twitter ownership 11 days after the regulatory deadline. The SEC has said it is probing whether Musk committed civil fraud by delaying his disclosure or misleading the market.
No Enforcement Action Filed
Musk likely saved more than $143 million by delaying reporting his Twitter stock holdings on time, the Wall Street Journal reported in May 2022. The billionaire business owner currently has a nearly 13% stake in Tesla. Prior to selling TSLA shares to purchase Twitter, now X, for $44 billion in late 2022, Musk owned around 22% of Tesla.
Federal regulators have not yet filed any enforcement action against Musk in relation to his Twitter trading.
However, the Wall Street Journal reports if the SEC does take any action, it could ask a judge to ban Musk from serving as an officer or director of a public company. This could potentially open him up to being removed from Tesla, the Journal report said.
Previously, Musk settled SEC fraud claims in 2018 around tweets about having “funding secured” to take Tesla private. In that suit, the SEC requested the judge prohibit Musk from being an officer or director of a public company. Instead, Musk stepped down as Tesla chairman and paid a $20 million fine. Tesla also paid a $20 million penalty, bringing the total to $40 million.
“As a result of the settlement, Elon Musk will no longer be Chairman of Tesla, Tesla’s board will adopt important reforms — including an obligation to oversee Musk’s communications with investors — and both will pay financial penalties,” Co-Director of SEC’s Enforcement Division Steven Peikin said at the time. “The resolution is intended to prevent further market disruption and harm to Tesla’s shareholders.”
Tesla Stock Performance
TSLA gained 5.3% to 187.52 during market action on Monday. Last week, Tesla stock gained 0.3% to 178.01. On Thursday, shares hit an intraday high of 191.08, rebound after slipping Tuesday below its 50-day moving average for the first time since May 13.
Tesla shareholders last week voted in favor of giving Musk his 2018 $56 billion pay package and reincorporating the EV giant in Texas, moving it from Delaware.
After five weeks of tight closes, Tesla stock appears to have forged a new base with a 198.87 buy point, according to MarketSurge charts. However, it is still below its 200-day moving average and is in a downtrend.
TSLA declined 2.8% in May and remain down around 30% in 2024. However, Tesla has rallied since reporting first-quarter earnings and revenue on April 23, finding support just above its 50-day moving average. On April 22, Tesla stock hit a 52-week low of 138.80.
Robotaxi And Tesla Value
With the company’s annual meeting in the rearview mirror, analysts are looking to Tesla’s second-quarter earnings in mid-July. The company will also unveil its “robotaxi” on August 8.
Cathie Wood and her Ark Invest firm last week updated its Tesla stock price target to 2,600 by 2029. Wood has long been bullish on Tesla’s autonomy push and robotaxi aims.
Wood’s firm estimates that around 90% of Tesla’s enterprise value and earnings will be attributed to the robotaxi business in 2029.
Without a robotaxi network and business, Ark Invest says its TSLA price target would be around $350 per share, according to the report.
JPMorgan analysts on Tuesday said robotaxi revenues could be years away. That followed discussions with Tesla investor relations team.
Tesla stock ranks seventh in the 35-member IBD Auto Manufacturers industry group. The stock has a weak 47 Composite Rating out of a best-possible 99. Shares have an 18 Relative Strength Rating and a 62 EPS Rating.
Please follow Kit Norton on X @KitNorton for more coverage.
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