Elon Musk’s careless tweet may cost him his job at Tesla

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The bad boy strikes again. Elon Musk, the founder and CEO Tesla, has tweeted something he probably shouldn’t have and now the US financial regulator has asked a judge to find him in contempt of court. It’s no trivial matter. Tesla shares tumbled almost five per cent in after-market trading on Monday.

The tweet, from February 19, forecast how many cars Tesla would produce in 2019. That’s a “forward-looking statement”, and companies that are listed on US stock markets have to follow tight rules on how and when they can make such forecasts.

The US regulator, the Securities and Exchange Commission (SEC), says that Musk has once again provided misleading market information, breaching a settlement reached last October that forced him to run any Tesla-related tweets past his lawyers. The deal also earned him a fine of $20 million (£15m) and temporarily forced him to surrender his role as Tesla’s chairman.

As it happens, one of Tesla’s lawyers saw the tweet and rushed to huddle with Musk. The result: four hours later Musk posted a correction. His first tweet had suggested that Tesla would manufacture half a million cars this year; the correction cut this by a fifth to around 400,000.

In a court filing on Monday night, the SEC says Musk has “once again published inaccurate and material information about Tesla to his over 24 million Twitter followers”.

Some investors are losing patience. “I hope they take away his phone,” says Ross Gerber, the CEO of fund manager Gerber Kawasaki. The fund has about 35,000 Tesla shares. “I am all for the bad-boy attitude, in theory, but this is still a business and he’s costing his company and shareholders a lot of money,” Gerber told Bloomberg.

It’s still unclear how the judge will react. In a worst-case scenario, Musk could be removed as CEO. Or fined. Or both. Tesla’s board could also be fined, says Philippe Houchois, a Wall Street analyst at Jefferies. But, he adds, the situation could also end up being dismissed as a misunderstanding – because it’s very easy to confuse the annual production volume of a company.

Houchois says that even if Musk is forced to leave his company, at this point Tesla has become much bigger than just him, and it’s not as critical having him at the helm as it was a few years ago.

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