What Happened to Elon Musk?

The American stock market supervision already determined against Elon Musk because of misleading investors. Now, the SEC’s ongoing investigation could be aggravated.

Musk had surprisingly announced on August 7 in a tweet that he was considering removing Tesla from the stock market at a stock price of $ 420. The action had caused a great deal of commotion, initially raising the price and calling the stock market supervisor to the scene. After all, the price of $ 420 mentioned by Musk would have meant a premium of around 20 percent on the share price at that time.

Later, Musk rowed back. A financing commitment from Saudi Arabia was not yet in the towel, although he had gained this impression at the end of July. Now Musk announced the withdrawal from the alleged stock market retreat. He told the board, “The better way for Tesla is to stay on the stock market,” Musk wrote in his blog post on Friday.

This jumpiness raises investor questions about Musk’s health and whether he is still the right person as Tesla boss. It shakes Musk’s credibility with the long-suffering and loss-burdened investors.

The SEC had taken concrete steps in mid-August to investigate the planned stock market retreat. Among other things, it focuses on whether Musk‘s information on the plans and the status of the financing talks was correct and, according to media reports, requested information from all members of the Board of Directors.

It quickly spread skepticism. For privatization would be a financial Herculean task. Tesla would have been valued at Musks price target total of about 72 billion dollars, moreover, the company has about ten billion debt.

Investors mobilized. Two have sued the Tesla boss. His tweets were wrong and misleading. It is an attack to decimate short sellers. Short sellers speculate about financial bets on falling prices. The sharp increase in Tesla shares following Musk’s announcement had caused these speculators, who are betting on a decline of Tesla, to suffer heavy losses.

Musk continues to maintain its claim that “more than enough” funding was available to take Tesla out of the market. Where exactly the money should have come from, he does not explain. Therefore, Tesla now has to prepare for a lengthy SEC investigation and faces class actions for misleading statements and market manipulation.

Looking at Tesla’s strained capital, Musk has done no favor with the whole back and forth. Not just because of the upcoming legal costs related to the class actions and SEC investigations. To dispel the impression that the tweet on the stock market retreat had been a bluff, Tesla had also taken costly measures to test the idea. For example, the company was advised by the investment company Silver Lake and the investment banks Goldman Sachs and Morgan Stanley – this is not cheap. And the stock price Musk has also done a disservice – the last noted again lower than before his Iriews tweet.

Meanwhile, many major shareholders are worried that the superstar of Silicon Valley, who leads Tesla as a one-man show so far, even the largest risk for the company. For just now Tesla goes through with his hopes Model 3, probably the most critical production phase, which is why Musk is actually stronger than ever demanded. At the end of June, the head of the company had trumpeted when, with more than half a year late, the production target was finally reached, allowing 5000 units of the first cheaper Tesla model to run every week. However, doubts about the sustainability of the Model 3 production are also increasing. “Our experts found numerous quality issues such as missing screws, heavy noise, or uneven gap dimensions,” states a recent UBS analysis.

At the same time, the website “Business Insider” reported on the basis of internal documents from Tesla of an enormous error rate. More than 4,300 of the 5,000 produced in the last week of June Model 3 had to be revised accordingly.

Hülya Karahan: The Founder