Tesla’s share price fell by 12% Friday morning, just after the opening of Wall Street, and investors were worried about the future of the company if Elon Musk was to be removed from his position as CEO.
Shares of the electric car maker dropped from $ 308 ($ 236) Thursday to nearly $ 270 after the announcement that US regulators have sued Musk for alleged securities fraud.
The Securities and Exchange Commission (SEC) announced Thursday that it wants to remove Musk from Tesla’s board of directors after “false and misleading” tweets about the company’s potential private use.
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Musk is a “liar” who will do anything to increase Tesla’s share price
In August, Musk tweeted that he was considering taking Tesla privately and that he had received $ 420 per share to fund it, which triggered a surge in stocks.
Since this tweet, Mr. Musk has gone back and said that he had discussed the privatization of the company with the sovereign fund of Saudi Arabia and that he could confidently say that he could get a financing for the price of this action.
An investor called him a “liar who wants to do everything” to keep the price of Tesla’s shares at a high level.
Bill Smith, president and chief information officer of Blaine Capital, who is betting that Tesla’s share price will fall (short sale), predicted that the lawsuit against Mr. Musk was “only the beginning “.
“One of the most difficult things about brevity is that Musc is a liar, he’s always ready to do something to keep this reserve,” Smith said in an interview with CNBC.
Musk described the regulator’s actions as “unjustified” and said he had acted in “the best interests of truth, transparency and investors”.
“Integrity is the most important value of my life and the facts will show that I have not compromised it in any way,” he said in a statement.
Misleading stock markets are a heavy burden for a business owner because they can result in huge losses for investors. If the SEC’s allegations are proven, Mr. Musk’s conduct would result in securities fraud and remove him from the company’s board of directors.
Musk is so important to Tesla that his fall would jeopardize the future of the company, Smith said, predicting that Tesla should declare bankruptcy without his enigmatic CEO.
According to the complaint filed by the SEC, “the statements of Musk, posted on Twitter, falsely indicated that, if he decided, it would be virtually certain that he could buy Tesla privately at a purchase price significantly higher than stock price at that time Tesla said the financing of this multi-billion dollar deal was secure and the only option was the shareholder reconciliation. “