A couple of weeks ago, we discussed a Michael Hiltzik column that looked at some similarities between Donald Trump and Elon Musk and suggested that institutions which rely too heavily on charismatic but erratic con artists are likely to have extremely rude awakenings at some point.
Subsequent events have not undercut his thesis.
Tesla stock drops almost 14% as SEC tries to force Elon Musk out of company leadership
by Samantha Masunaga
Tesla Inc. stock closed sharply lower Friday as investors worried about a Securities and Exchange Commission lawsuit that seeks to bar Elon Musk from continuing to lead the electric-car maker.
Shares of Tesla closed at $264.77, down 13.9% Friday afternoon.
The SEC filed its complaint against Musk after markets closed Thursday, alleging that the chairman and chief executive committed securities fraud by issuing a series of “false and misleading tweets about a potential transaction to take Tesla private.”
On Thursday evening, Tesla’s board of directors defended Musk, saying it is “fully confident in Elon, his integrity, and his leadership of the company, which has resulted in the most successful U.S. auto company in over a century.” It did not say what metric it was using for auto-company success.
[This is a good place to note that the LA Times, perhaps due to the influence of Hiltzik, was one of the first major news organizations to start seeing through the real life Tony Stark hype around Tesla – – MP]
Musk also issued a statement, calling the SEC lawsuit unjustified. “I have always taken action in the best interests of truth, transparency and investors,” he said.
The SEC complaint, which asks the court to ban Musk from running any public company, seeks a jury trial.
A request to bar an individual from serving as an officer or director of a public company is not unusual for SEC enforcement action, said Tom Gorman, a partner at law firm Dorsey & Whitney. But he believes a judge is unlikely to agree to force out Musk because of the likely impact it would have on Tesla, its workforce and shareholders.
“Mr. Musk is this company, in many ways,” Gorman said. “If you just say, ‘We’re not going to let you be an officer or director of a public company anymore,’ you could destroy the company and millions of dollars of shareholder value.”
Musk’s possible exit is likely one of the reasons Tesla’s stock fell the way it did, said David Whiston, stock analyst at Morningstar.
“Without Elon Musk, Tesla’s just an automaker that’s burning too much cash and has too much debt,” he said.
Of course, with Elon Musk, Tesla’s just an automaker that’s burning too much cash and has too much debt. Musk brings no special magic to this company he is extraordinarily gifted as a fundraiser, a promoter, and a motivational speaker, but he has shown absolutely no exceptional talent in any other area, especially engineering.