Tesla Inc. is under investigation by the US Justice Department following a series of tweets posted by its CEO, Elon Musk. The probe was confirmed last night by Tesla, and follows a civil inquiry by securities regulators.
The investigation comes after the controversial billionaire, who currently ranks number two in our Top 50 CEOs, announced on Twitter that he wanted to take his car manufacturing company private. Musk tweeted that he had “secured funding” and was “considering taking Tesla private” to his large number of followers.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Following the tweet, Tesla shares rose sharply, resulting in Nasdaq ceasing trading although they did re-open and eventually closed 11% up in the wake of the news. Investors, shareholders and media outlets were largely blindsided by Musk’s announcement, causing alarm and consternation among many, not least those who have taken up short positions against the US car manufacturer.
Following the announcement of the latest DOJ investigation, Tesla’s shares dropped by 7% and the company has seen nearly £14 billion removed from the value after a series of questionable moves by its CEO.
For Musk and Tesla, this is just another in a long line of potential issues including a personal $75,000 lawsuit against Mr Musk submitted by British diver Vernon Unsworth for calling him a “pedo” after he helped to rescue trapped children from a cave in Thailand.
With production of the Model 3 still raising question marks, it has not been an easy journey for both the carmaker and the billionaire due to lawsuits from investors, the DOJ investigation, a civil investigation by the Securities and Exchange Commission and a further drop in shares when he decided to smoke marijuana live on a podcast that was streamed online.
In a statement, Tesla have said: “Last month, following Elon’s announcement that he was considering taking the company private, Tesla received a voluntary request for documents from the DoJ and has been cooperative in responding to it.” It added: “We have not received a subpoena, a request for testimony, or any other formal process. We respect the DoJ’s desire to get information about this and believe that the matter should be quickly resolved as they review the information they have received.”
With all the pressure from his investors urging him not to take the company private, Elon will keep it publicly listed, after posting the following on a blogpost: “Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was, ‘Please don’t do this’.”
Following confirmation of the DOJ investigation, Tesla shares dropped 3.4% to $284.96 on Tuesday and currently sits around 8.5% down this year.