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What happened
Actions of You're here (NASDAQ: TSLA) jumped Monday, up 17.6%. At 10:00 am EDT, the shares of the electric car manufacturer were up 16.8%.
The stock increase follows the news of the weekend that CEO Elon Musk has settled with the SEC's recent allegations. The SEC had filed a lawsuit last week alleging that the executive had misled investors with tweets about the possibility of taking the company behind closed doors.
In addition, another reason for rising shares on Monday is likely the result of the announcement that the company was about to achieve profitability in the third quarter.
Source of the image: Tesla.
So what
Musk made "a series of false and misleading statements," the SEC said in a lawsuit to the CEO last week. The main problem described in the SEC's claim was that Musk's decision to assert that the funding had been "guaranteed". The SEC asserted that "Musk has not even discussed, much less confirmed, terms of the key agreement, including the price, with any potential source of funding" at the time he had stated that the financing of the agreement was obtained.
Musk's settlement is generous in relation to the SEC's original lawsuit claim, which would have removed him from his duties as president and CEO and would prevent him from being an officer or director of a publicly traded company in the future. The resolution allows Musk to refrain from admitting his guilt and continue to hold the position of CEO, but requires him to step down as chairman of the board for three years and pay a fine of $ 20 million. dollars to the injured investors. In addition, Tesla must also pay a separate fine of $ 20 million and put in place a more effective process to oversee the communication of the Executive Director.
Beyond the deal, last weekend, Tesla was "on the verge of achieving profitability," Musk said in an email to employees (via Bloomberg) over the weekend. "If we do our best tomorrow, we will win an epic victory that will exceed all expectations," said Musk.
Now what
The Musk settlement is a breath of fresh air for investors. Not only does this allow the important leader to remain CEO, but the supervision that Tesla needs to put in place to help control the CEO's communication could ultimately be better for investors, Musk's tweets being sometimes a source of concern.
The settlement also allows Tesla to put the suit behind her and focus on producing model 3. The company will release the shipments every day, as it usually reports quarterly shipments in the first three days of the end each quarter. The third quarter of Tesla has ended Sunday.
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