Of the two, Musk's electric vehicle company has fared worse,
with its stock down almost 16 percent so far this week to $728. Twitter shares
fell 9.5 percent for the week, closing Thursday at $45.08. Both stocks have
taken a bigger hit than the S&P 500, which is down 4.7 percent for the
week.
Along with malaise in the broader markets, investors have
had to weigh legal troubles for Musk, as well as the possibility that his
acquisition of Twitter could be a distraction from running the world's most
valuable automaker.
The Wall Street Journal reported Wednesday that US
securities regulators are investigating Musk's tardy disclosure that he had
bought more than 5 percent of Twitter shares. Musk now owns more than 9 percent
of the San Francisco company.
The SEC wouldn't comment, and a message was left for Musk's
lawyer.
A lawsuit filed last month by some Twitter shareholders
alleges that Musk's stake hit 5 percent on March 14, so he should have filed
forms with the SEC disclosing that by March 24. Instead, Musk didn't make the
required disclosure until April 4, hurting less-wealthy investors who sold
Twitter stock in the nearly two weeks before he disclosed his stake and drove
up the price, the lawsuit alleges.
Also Wednesday, a federal judge in California handed a group
of Tesla shareholders a major victory, unsealing his ruling that Musk falsely
and recklessly tweeted in 2018 that he had funding secured to take Tesla
private when the deal wasn't final. The tweets pushed up Tesla's share price at
the time.
The ruling means that jurors in a shareholder lawsuit will
start off knowing that the judge has ruled that Musk's tweets were false.
At the time of the August 7, 2018 tweets, Musk was in talks
with the Saudi Public Investment Fund about bankrolling the deal. But Judge
Edward Chen determined that it wasn't final when Musk tweeted: "Am
considering taking Tesla private at $420. Funding secured.”
Chen wrote that there was “nothing concrete” about funding
from the Public Investment Fund, and that discussions were clearly preliminary.
"There had been no discussion about what the purchase
price would be for a share of stock. Nor had there been any discussion about
what percentage of the company the PIF would own or the total amount of money
the PIF would contribute,” Chen wrote in his ruling.
Musk's lawyers have asked Chen to reconsider, contending
that they aren't aware of cases in which a court has taken similar issues out
of a jury's hands “where the statements were at best ambiguous and were issued
in the word-constrained and informal context of posts on Twitter.”
The August 2018, tweets already have landed Musk in legal
trouble. The SEC brought a securities fraud charge, which Musk and Tesla settled
in 2018. Each agreed to pay a $20 million fine and that a company lawyer would
review any Musk tweets that could affect the stock price. The SEC is
investigating whether Musk has violated that requirement.
Musk recently lost a bid to have the settlement thrown out
on grounds that it violated his First Amendment free speech rights.
Since Musk made his $54.20 per share offer to buy Twitter
public on April 14, the shares are exactly the same price — $45.08. Analysts
say that's an indication of investor skepticism that the deal will go through
even though Musk has lined up financing. Twitter shares are up 4.3 percent year
to date.
Tesla shares, however, are down 26 percent since the April 14
offer, partly on fears that Musk will become distracted as Tesla, which is
headquartered in Austin, Texas, opens two new factories and deals with supply
chain issues. The shares have tumbled more than 30 percent so far this year. © Reuters
0 comments:
Post a Comment