Won't the Greeny Tesla Fan Girls be upset as they see Tesla sliding towards oblivion ?Elon Musk just had a terrible week and it could easily get worse, fastLinette Lopez Apr 6, 2019, 4:42 AM
Tesla’s legal and financial troubles came to a head this week as the company reported weak deliveries and its CEO went to court in Manhattan. The week epitomized the company’s troubles in 2019, with investors starting to wonder about CEO Elon Musk’s leadership and the company’s cash position.
“This f—ing guy’s crazy,” one investor told Business Insider.
You should forgive yourself if this is the first time you’re hearing that the billionaire entrepreneur Elon Musk – with his eyes staring straight ahead, unblinking – went before a judge in Manhattan on Thursday.
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He was there flanked by his security guards and three lawyers. The Securities and Exchange Commission was there, represented by three more lawyers. There were journalists and hobbyists and short-sellers in the packed courtroom, all waiting to see whether Judge Alison Nathan would hold Musk in contempt of court.
The US Securities and Exchange Commission had ordered Musk to stop making material statements about his car company, Tesla, on Twitter without approval from an attorney designated by the court. You’ll recall that Musk caused company-wide chaos last August when he tweeted he had “funding secured” to take the company private. He ultimately settled with the SEC, which described this and other tweets as “false and misleading.”
But the SEC says Musk broke the settlement’s rules in February when he tweeted that Tesla would make 500,000 cars in 2019.
It will not.
We know that not only because the company itself has announced lower projections (400,000 at the top) but also because of the other pressing disaster in Tesla land right now – it is not selling enough cars.
The same day Musk sat in the courtroom, Tesla’s stock was falling by about 9%. Hours earlier, on Wednesday night – after two days of hemming and hawing – the company released its first-quarter delivery numbers. They were worse than most analysts had imagined.
Tesla delivered only 63,000 cars, a roughly 31% drop from the quarter before. And most devastatingly, Tesla was hit the hardest on its most lucrative cars, the luxury Model S and Model X, which saw their sales cut in more than half.
Given all of the problems on Musk’s plate, it’s no wonder he seemed relieved when the judge deferred a decision on whether he was in contempt of court and asked his lawyers to meet with the SEC once in the next two weeks to see whether they could carve out a deal.
“Put on your reasonableness pants on,” she said, or she would decide Musk’s fate.
Musk left the courtroom and promptly put out a statement dripping with vindication. “I have great respect for Judge Nathan, and I’m pleased with her decision today,” the statement said. “The tweet in question was true, immaterial to shareholders, and in no way a violation of my agreement with the SEC.” (Nathan had not said any of that.)
It went on: “We have always felt that we should be able to work through any disagreements directly with the SEC, rather than prematurely rushing to court. Today, that is exactly what Judge Nathan instructed.”
In a week of losses, Musk could be forgiven for trying to eke out some kind of a win. Neither of Musk or Tesla’s major struggles – legal or financial – is in any way resolved, and even long investors are starting to worry.
“Yeah I own the stock. It’s not one of my favourite positions. I just think the cars are leaps and bounds above everything else in this field,” said Andrew Left of Citron Research, a man who went from short Tesla to long and loud about it.
“It would be better without Elon,” Left said, adding: “I think this guy is just a big distraction. It kills me. It comes from the top.”
“The communication is terrible,” he said. “This f—ing guy’s crazy.”
The legal issues could get worse, fast. The nightmare scenario in the coming weeks is that the SEC and Musk’s lawyers can’t come to an agreement and Nathan rules him in contempt.
The financial issues could get worse, fast, too. Tesla is expected to release its Q1 balance sheet in the coming weeks, giving investors a clearer picture of the company’s financial position. More bad news could send them running for the hills.
Have a story to share about working for or interacting with Tesla? Contact Business Insider’s Linette Lopez at llopez@businessinsider.com.
2019 was supposed to be chill at Tesla, not like 2018, when Musk “bet the company” on the success of the Model 3 car and Tesla was “near death” trying to make that happen. That seemed to pay off in the third and fourth quarters, when Tesla achieved profitability in consecutive quarters for the first time.
Read the rest of Tesla's decline and fall herehttps://www.businessinsider.com.au/tesla-elon-musk-goes-to-court-and-deliveries-...
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