Tesla shares fall as analysts split on Musk's future with the company | Technology

What is Tesla without Elon Musk? That was the question asked by Wall Street on Friday as the share price of the electric car company collapsed following the announcement that the main US financial regulator was suing Musk for fraud and seeking to ban him from directing a public company.

For the billionaire entrepreneur, it was the last self-inflicted injury in a series of car accidents that hit Tesla's share price and Musk's reputation. Friday morning, the price of Tesla shares fell further by 12%, investors worried that the leader of the car is finally out.

The latest crisis came after the Securities and Exchange Commission (SEC) filed a lawsuit in New York accusing Musk of fraud.

Tesla has struggled to achieve its goals for months and burns fast in cash. Musk blamed short sellers, investors betting on a collapse of a company's stock price, for Tesla's difficulties.

In August, Musk seemed to have found a solution: take the private company. In a tweet now infamous, he wrote: "I'm considering taking Tesla privately at 420 bucks. Guaranteed financing.

This statement was "false and misleading", according to the SEC, and was the first in a series of "materially false and misleading statements".

Far from knowing that he had an offer, Musk "knew or was oblivious to not knowing" that his statements were false or misleading. "In truth and in fact, Musk had not even discussed, let alone confirmed, key terms of sale, including the price, with a potential source of funding," the SEC said in its lawsuit.

Even the $ 420 price was misleading – based on a joke rather than a spreadsheet.

"According to Musk, he calculated the price of $ 420 per share based on a 20% premium over the closing price of the day, because he thought that 20% was a" standard bonus "in private transactions . This calculation resulted in a price of $ 419 and Musk said he had rounded the price up to $ 420 because he had recently learned the importance of that number in marijuana growing and thought his girlfriend would find it's funny, which is not choosing a price.

The SEC has the power to impose fines on directors and corporations if they have misled investors. More seriously for Musk and Tesla, they can ban a director from acting as an officer in a public company – a move they are pursuing against Musk.

Musk clearly thinks that Tesla can not do without him. On Friday, reports began to circulate that Musk and the SEC had been close to an agreement before the SEC filed its lawsuit. The settlement would have meant fines for Musk and Tesla, and more importantly, a ban on Musk as president for two years. According to CNBC, Musk could not accept this agreement. The case now seems to go to court, another headache for Musk.

Analysts are divided as to the likely outcome of the case. Gene Munster, managing partner of Loup Ventures, estimates that "there is a 50% chance that Musk will remain CEO after the resolution of the case" and that he's even more likely to stay involved with One way or another with Tesla ".

"As the stock's reaction shows, investors believe that Musk's withdrawal from Tesla would be negative for the company's prospects, despite its recklessness in" go-private "tweets. If the SEC is granted the request to eliminate Musk, one wonders if they are doing more to hurt or protect permanent shareholders, at least in the eyes of the market, "he wrote in a note to investors. He believes that a substantial fine is the most likely outcome.

Gordon Johnson, an analyst at Vertical Group who predicts a collapse of Tesla shares for months, is less optimistic.

There was evidence of "clear handling," he said on the TD Ameritrade network. Johnson believes that Musk's ability to inspire investors with a vision of a better future has blinded them to Tesla's "horrendous" fundamentals.

"The fact is that there is always that carrot in which Elon Musk is looking in the future on something that will drive this society to nirvana, if you like, and he's constantly missing it," he said.

"Without his constant comments on Twitter to give investors hope that someday they will arrive where the turnover and profits justify this assessment, the stocks will be under enormous pressure as people will be forced to focus on fundamentals. . "

For the moment, Musk is preparing to fight. Musk said that he was "deeply saddened and disappointed" by this "wrongful action". "Integrity is the most important value of my life and the facts will show that I have never compromised that," he said.

The council also issued a statement in favor of Musk, saying he was "fully confident in Elon, its integrity and leadership in society."

But the support of the council will not end the bad race of Tesla or Musk. The Justice Department is now entering Musk's tweets and could start criminal proceedings if it finds that it has deliberately misled investors. Musk's nine-word tweet could be the most expensive mistake he ever made.