Tesla Shares Down 7 Percent After Elon Musk Mocks SEC

Tesla CEO Elon Musk is no stranger to Twitter-based controversy, as the enigmatic billionaire’s tweets frequently affect the company’s stock price. Musk’s mockery of the U.S. Securities and Exchange Commission on Thursday was no exception, as Tesla, Inc. (TSLA) shares slid Friday, erasing significant gains they had made earlier in the week.

Musk made a deal with the SEC last week that would require both he and Tesla to separately pay $20 million as punishment for a take-private debacle earlier this year. As part of the deal, he has to step down from Tesla’s board but can remain the company’s CEO. A federal judge ordered both Musk and the SEC to justify the settlement on Thursday, after which Musk referred to the agency as the “Shortseller Enrichment Commission.”

Tesla is one of the most shorted stocks in the United States. Its share price was down 7 percent with less than an hour to go before market close on Friday as a result. The electric car manufacturer had actually recouped some of its previous losses after the settlement, going up 17 percent at one point on Monday.

By Friday, much of those gains had been erased, at least partially thanks to Musk’s SEC tweet. Musk’s tweets and their effects on the company’s share price is actually central to the issue at hand. In August, the CEO tweeted that he wanted to take the company private at $420 per share, claiming he had secured funding for what would have been a massive undertaking.

The company’s share price skyrocketed to such a degree that day that trading was actually briefly halted. Soon after, the SEC began a probe to determine if what Musk did actually constituted fraud or market manipulation. The federal agency found enough of a case to file a lawsuit against Tesla, claiming that investors were hurt by Musk’s false claim that he had secured funding to go private.

Instead of dragging the issue to court, Musk agreed to the aforementioned settlement not long after being sued by the SEC. Still, Thursday’s tweet demonstrated that Musk fundamentally disagrees with the SEC’s actions.

The tech billionaire has been at the center of multiple Twitter scandals in 2018. Earlier this year, he made an unsubstantiated claim that a British cave diver was a “child rapist” after the diver was involved in the rescue of a Thai youth soccer team. The diver had been vocally critical of Musk’s proposed plan to save the children with a custom-built submarine.