Connect with us

Investor's Corner

Tesla is getting unnecessarily weighed down by the SEC’s claims against Elon Musk

Published

6 years ago

on

Tesla stock (NASDAQ:TSLA) dropped on Monday after the US Securities and Exchange Commission asked a judge to hold Elon Musk in contempt for reportedly violating a settlement that required him to get approval before releasing any social media posts or announcements that could be material to investors. Regardless of the judge’s decision, Elon Musk and the SEC’s run-ins with each other are adversely affecting investors and unnecessarily weighing down Tesla. This is something is best avoided, by the company and Elon Musk himself, in the future.  

According to the SEC, Musk’s tweet on February 19, when he mentioned that Tesla will make “around 500K” vehicles in 2019, was a violation of his settlement with the agency last year. Musk later clarified his statement, explaining that he was talking about an annualized production rate of around 500k (roughly 10k cars per week) vehicles by 2019’s end, but that deliveries for the year are “still estimated to be about 400k.” 

The SEC claimed in papers filed in a Manhattan court that Elon Musk “once again published inaccurate and material information about Tesla to his over 24 million Twitter followers, including members of the press, and made this inaccurate information available to anyone with internet access.” The SEC’s announcement adversely affected the company’s stock, sending TSLA plummeting 4% on Monday’s after-hours following the announcement. It did not take long before some of the company’s staunchest critics began to predict that Musk will be incarcerated.

Despite the company’s critics calling for Musk to be sent behind bars, Peter Haveles, a partner at Pepper Hamilton in New York whose practice specializes in commercial and regulatory disputes, noted in a statement to The Verge that another fine will likely be the result of the SEC’s claim against the Tesla CEO.

“Mr. Musk will try to argue that it’s a one-time thing, and the issue will be, is that really the case? Will the SEC come forward with evidence from Tesla that they are struggling to get Mr. Musk to comply with the process? It’s unlikely that Musk will face being barred from serving as a director or officer of a publicly traded company for the tweet,” he said, later adding that Elon Musk’s tweet doesn’t rise to the level of criminal contempt; and thus, the CEO does not have to worry about jail time.

Nevertheless, it should be noted that while the SEC might be a bit aggressive with its request to have the CEO held in contempt of court due to his February 19 tweet, Musk could have avoided the entire issue altogether if he had just been more careful. And it’s not like this is the first time such a thing happened either, as it was his Twitter activities that landed him in hot water last year due to his now infamous “funding secured” announcement.

It will likely be difficult for the SEC to prove that Elon Musk’s tweets were a violation of his settlement’s terms. For one, Musk’s February 19 tweet was made while markets were closed. Thus, it will be very challenging to gauge the “materiality” of the announcement. Musk also mentioned the same figures weeks before during the Q4 2019 earnings call, when he estimated that Tesla could produce “maybe in the order of 350,000 to 500,000 Model 3s” this year. Musk mentioned this in a later tweet, stating that the SEC seemed to have forgotten to read the transcript of Tesla’s Q4 earnings call.

It is difficult to not see a certain bias emerging from the SEC against Musk’s Twitter activities, considering that the tweet in question did not really affect Tesla stock and the estimate was already public knowledge due to the fourth quarter earnings call. In a way, it almost seems like the SEC’s recent initiative against Musk is response of sorts against the CEO’s statements against the agency. Musk has mocked the agency on Twitter in the past, dubbing it as the “Shortseller Enrichment Commission,” and in a 60 Minutes segment, he flat-out admitted that he does not respect the SEC. Ultimately, the SEC’s claim would have to rely on the premise of Elon Musk posting his Tesla-related tweet without the message being vetted first, as agreed upon in last year’s settlement.

Tesla is at a point in its history where the company could grow into one of the most potent forces in the auto industry. With Model 3 production stabilized, Gigafactory 3 under construction, and vehicles like the Model Y set to be revealed, tweets like Musk’s February 19 announcement are things that the company can do without. If led by a more careful, more calculating Elon Musk, Tesla’s inevitable rise to power will most definitely happen sooner than expected.

As of writing, Tesla shares are trading -3.52 at $288.25 per share on Tuesday’s pre-market.

Disclosure: The opinions presented in this article are the author’s alone, and do not necessarily reflect the stand of Teslarati. I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours. 

Related Topics:

Simon is a reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday.

Continue Reading
Comments

Investor's Corner

Tesla is ‘better-positioned’ as a company and as a stock as tariff situation escalates

Published

1 month ago

on

February 3, 2025

By

The Cybertruck-towed Model Y ad at Hayden Planetarium. Credit: Tesla North America | X

Tesla is “better-positioned” as a company and as a stock as the tariff situation between the United States, Mexico, and Canada continues to escalate as President Donald Trump announced sanctions against those countries.

Analysts at Piper Sandler are unconcerned regarding Tesla’s position as a high-level stock holding as the tariff drama continues to unfold. This is mostly due to its reputation as a vehicle manufacturer in the domestic market, especially as it holds a distinct advantage of having some of the most American-made vehicles in the country.

Analysts at the firm, led by Alexander Potter, said Tesla is “one of the most defensive stocks” in the automotive sector as the tariff situation continues.

The defensive play comes from the nature of the stock, which should not be too impacted from a U.S. standpoint because of its focus on building vehicles and sourcing parts from manufacturers and companies based in the United States. Tesla has held the distinct title of having several of the most American-made cars, based on annual studies from Cars.com.

Its most recent study, released in June 2024, showed that the Model Y, Model S, and Model X are three of the top ten vehicles with the most U.S.-based manufacturing.

Tesla captures three spots in Cars.com’s American-Made Index, only U.S. manufacturer in list

The year prior, Tesla swept the top four spots of the study.

Piper Sandler analysts highlighted this point in a new note on Monday morning amidst increasing tension between the U.S. and Canada, as Mexico has already started to work with the Trump Administration on a solution:

“Tesla assembles five vehicles in the U.S., and all five rank among the most American-made cars.”

However, with that being said, there is certainly the potential for things to get tougher. The analysts believe that Tesla, while potentially impacted, will be in a better position than most companies because of their domestic position:

“If nothing changes in the next few days, tariffs will almost certainly deal a crippling blow to automotive supply chains in North America. [There is a possibility that] Trump capitulates in some way (perhaps he’ll delay implementation, in an effort to save face).”

There is no evidence that Tesla will be completely bulletproof when it comes to these potential impacts. However, it is definitely better insulated than other companies.

Need accessories for your Tesla? Check out the Teslarati Marketplace:

Please email me with questions and comments at joey@teslarati.com. I’d love to chat! You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.

Continue Reading

Investor's Corner

Tesla gets price target boost from Truist, but it comes with criticism

Published

1 month ago

on

January 30, 2025

By

Credit: Tesla

Tesla (NASDAQ: TSLA) received a price target boost from analysts at Truist Securities, but it came with some criticisms based on a lack of information on several things that investors were excited to hear about regarding future vehicles and AI achievements.

Last night, Tesla reported its earnings from the fourth quarter of 2024, and while it had a very tempered financial showing, missing most of the Wall Street targets that were set for it, the stock was up after hours and on Thursday due to the details the company released regarding its plans for 2025.

CEO Elon Musk stunned listeners last night by revealing plans to launch unsupervised Full Self-Driving as a service in Austin in June 2025. It will be the first time Tesla will offer driverless FSD rides in public, something it has been working with the City of Austin on since December.

Tesla to launch unsupervised Full Self-Driving as a service in Austin in June

It also reiterated plans for affordable models to be launched this year, potentially catalyzing annual growth in deliveries, something it said it expects to resume in 2025.

Tesla was flat on deliveries in 2024 compared to 2023.

The positives during the call were enough for Truist Securities analyst William Stein to raise the company’s price target to $373 from $351. However, Stein’s note to investors showed there was something to be desired despite all the good that was revealed during the call:

Stein said there was “not enough ground-truth” during the call and too much of a focus on “cheerleading” the company’s potential releases this year:

“Too much cheerleading; not enough ground-truth. In Q4, TSLA’s ASP weakness drive revenue, GPM, OPM, & EPS below consensus.”

As previously mentioned, Tesla did report weak financials that missed consensus estimates. What saved the call and perhaps the stock from plummeting on these missed metrics was the other details that Musk revealed, especially the FSD launch in Austin in June.

There were also plenty of things related to the affordable models and other vehicles, like the fact that Tesla plans to include things like Steer by Wire, Adaptive Air Suspension, and Rear Wheel Steering, that helped offset negatives.

Stein saw this as a distraction from what should have been reported:

“While CEO Elon Musk played the role of cheerleader, calling for TSLA’s path to massive market cap by leading in autonomy, management was remarkably short on two critical details: (1) info about new vehicles in 2025 and (2) milestones for AI acheivements, especially FSD. We continue to ask ourselves ‘where’s the beef?’ CY26 EPS to $3.99 (from $4.87). DCF-derived PT to $373 (from $351).”

Tesla did detail some AI milestones, like its record-breaking miles per accident on Autopilot, which was a Q4-best of 5.94 million miles. The Shareholder Deck also outlined major upgrades to AI:

“In Q4, we completed the deployment of Cortex, a ~50k H100 training cluster at Gigafactory Texas. Cortex helped enable V13 of FSD (Supervised)1, which boasts major improvements in safety and comfort thanks to 4.2x increase in data, higher resolution video inputs, 2x reduction in photon-to-control latency and redesigned controller, among other enhancements.”

Tesla shares are up 2.11 percent on Thursday as of 12:05 p.m. on the East Coast.

Need accessories for your Tesla? Check out the Teslarati Marketplace:

Please email me with questions and comments at joey@teslarati.com. I’d love to chat! You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.

Continue Reading

Investor's Corner

Tesla posts Q4 2024 vehicle safety report

Published

1 month ago

on

January 29, 2025

By

tesla-full-self-driving-unsupervised
(Source: Tesla)

Tesla has released its Q4 2024 vehicle safety report. Similar to data from previous quarters, vehicles that were operating with Autopilot technology proved notably safer. 

The Q4 2024 report:

  • As per Tesla, it recorded one crash for every 5.94 million miles driven in which drivers were using Autopilot technology.
  • The company also recorded one crash for every 1.08 million miles driven for drivers who were not using Autopilot technology.
  • For comparison, the most recent data available from the NHTSA and FHWA (from 2023) showed that there was one automobile crash every 702,000 miles in the United States.

Previous safety reports:

  • In Q3 2024, Tesla recorded one crash for every 7.08 million miles driven in which drivers were using Autopilot technology and one crash for every 1.29 million miles driven by drivers not using Autopilot technology.
  • In Q2 2024, Tesla recorded one crash for every 6.88 million miles driven in which drivers were using Autopilot technology, and one crash for every 1.45 million miles driven for drivers not using Autopilot technology.
  • In Q1 2024, Tesla recorded one crash for every 7.63 million miles driven in which drivers were using Autopilot technology, and one crash for every 955,000 million miles driven for drivers not using Autopilot technology.

Year-over-Year Comparison:

  • In Q4 2023, Tesla recorded one crash for every 5.39 million miles driven in which drivers were using Autopilot technology and one crash for every 1.00 million miles driven for drivers not using Autopilot technology.

Key background:

  • Tesla began voluntarily releasing quarterly safety reports in October 2018 to provide critical safety information about our vehicles to the public.
  • On July 2019, Tesla started voluntarily releasing annual updated data about vehicle fires as well.
  • It should be noted that accident rates among all vehicles on the road can vary from quarter to quarter and can be affected by seasonality, such as reduced daylight and inclement weather conditions.

Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.

Continue Reading