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Tesla's stock falls 11% after SEC sues Elon Musk

Tesla's stock tumbled Friday morning after the SEC sued Elon Musk for misleading investors.Musk tweet...

Posted: Sep 28, 2018 1:08 PM
Updated: Sep 28, 2018 1:08 PM

Tesla's stock tumbled Friday morning after the SEC sued Elon Musk for misleading investors.

Musk tweeted on August 7 that he had secured funding to take Tesla private at $420 a share. Typically, stocks match takeover prices that a company publicizes. Investors assume the deal will be completed and the company will eventually be worth the price at which the company says it will be sold.

However, skeptical investors never believed Musk, and the stock never approached anything close to $420 a share. It rose as high as $387.46 on August 7 and tumbled since then.

Their skepticism was for good reason: Musk had never secured the funding, the SEC alleges. He abandoned the plan to go private three weeks after he first tweeted about it.

The stock fell as low as $265 after the bell Thursday, 14% below Tesla's closing price for the day. Including the off-hours plunge, Tesla's stock has plummeted more than 29% since Musk's infamous tweet.

Tesla's falling stock price could come back to haunt the company. Tesla is burning through cash to build expensive plants and cars, but it badly needs that money to pay about $1 billion in debt by February 2019. Most of that would convert to stock if Tesla's price holds above $360 — but that seems unlikely.

If Tesla needs to pay back its debt with cash — and if the company lacks the cash to pay it — Tesla could raise the money by issuing more debt or stock. But that could further deflate its stock price, depressing the amount of capital the company has to spend on new infrastructure to build cars.

Musk has denied that the company faces a cash crunch. He says increased Model 3 sales will generate enough cash to finally make Tesla profitable in the second half of 2018.

The SEC's lawsuit could cause other problems for Tesla.

The agency has asked a federal judge to prevent Musk from serving as an officer or a director of a public company, among other penalties.

That's a serious concern for Tesla, which Musk built from scratch into a multibillion-dollar company. He's the carmaker's chairman and CEO.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 297581

Reported Deaths: 6808
CountyCasesDeaths
DeSoto19829231
Hinds18966395
Harrison16899283
Rankin12851265
Jackson12754234
Lee9722163
Madison9522204
Jones8042148
Forrest7295138
Lauderdale6879228
Lowndes6062140
Lamar593982
Lafayette5768114
Washington5235130
Bolivar4632124
Oktibbeha443295
Panola433798
Pearl River4219132
Warren4145115
Pontotoc411071
Marshall406595
Monroe3998129
Union397074
Neshoba3857171
Lincoln3630104
Hancock353378
Leflore3402122
Sunflower321386
Tate304674
Pike302797
Scott296771
Alcorn292763
Yazoo292266
Itawamba290775
Coahoma283169
Tippah280265
Copiah280159
Simpson277881
Prentiss271258
Marion258878
Wayne255741
Leake254572
Covington250480
Grenada248978
Adams235978
Newton233353
George232845
Winston222579
Jasper214545
Tishomingo213266
Attala210571
Chickasaw202054
Holmes183470
Clay179452
Stone173529
Tallahatchie171839
Clarke170773
Calhoun158728
Smith154333
Yalobusha146036
Greene128133
Walthall125441
Montgomery123540
Noxubee123431
Perry123335
Lawrence121621
Carroll119725
Amite112435
Webster111132
Jefferson Davis102931
Tunica99824
Claiborne99130
Benton94024
Humphreys93128
Kemper91523
Quitman77514
Franklin76520
Choctaw70317
Jefferson62927
Wilkinson62727
Sharkey49217
Issaquena1676
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Alabama Coronavirus Cases

Cases: 499819

Reported Deaths: 10148
CountyCasesDeaths
Jefferson720331403
Mobile36423741
Madison32708469
Tuscaloosa24457422
Montgomery22805523
Shelby22276219
Baldwin19935289
Lee15083161
Calhoun13963296
Morgan13801255
Etowah13419327
Marshall11460215
Houston10130264
Elmore9515190
Limestone9440139
St. Clair9057228
Cullman9000183
Lauderdale8630214
DeKalb8509175
Talladega7647165
Walker6601260
Jackson6552104
Autauga634792
Blount6256128
Colbert6010121
Coffee5261104
Dale4685107
Russell408134
Franklin400879
Covington3999107
Chilton3922104
Escambia379573
Tallapoosa3637143
Clarke344553
Chambers3434111
Dallas3428142
Pike293173
Marion288996
Lawrence286287
Winston258668
Bibb246558
Marengo245357
Geneva240670
Pickens226357
Barbour213951
Hale212969
Fayette202857
Butler201666
Henry183741
Cherokee178240
Monroe166739
Randolph165441
Washington157136
Macon147845
Crenshaw146955
Clay146254
Cleburne140341
Lamar133933
Lowndes133151
Wilcox123125
Bullock117736
Conecuh107224
Perry106427
Sumter101032
Coosa90324
Greene88932
Choctaw56123
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