Tesla Inc (NASDAQ: TSLA) is having an incredibly rough start to the trading session this morning, and for good reason. News is breaking that the CEO of the company, Elon Musk is the center of an SEC fraud suit. Today, we’ll talk about:
- The news;
- what we’re seeing from TSLA; and
- what we’ll be watching with regard to the stock ahead.
TSLA Falls Hard On Elon Musk Suit
As mentioned above, Tesla is having an incredibly rough start to the trading session this morning after news broke that the SEC has filed suit against Elon Musk, the CEO of the electric car maker. The suit is a relatively simple one that seems like an open and shut case.
Recently, Musk told TSLA investors that he would be taking the company private. He even tweeted that he had secured the funding to do so, causing the stock to see tremendous gains. However, here we are and no bring-private transaction has happened. Ultimately, it seems as though Musk hadn’t secured the funding that he told investors he did. As a result, the SEC has filed suit against the troubled electric car CEO for fraud.
This is going to be a real battle for Musk with quite a bit on the line. The suit doesn’t only seek for Mr. Musk to pay back ill-gotten gains and penalties. If the SEC gets what they want, Musk will be banned from serving as an officer or director of TSLA or any other publicly traded company in the United States.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dig into the market is that the news leads to moves. In the case of Tesla, the news was overwhelmingly negative. When the SEC calls the CEO of a publicly traded company a fraud, there’s good reason to be concerned, and that’s just what investors are. So, it comes as no surprise that upset investors are sending the stock tumbling down. As is normally the case, our partners at Trade Ideas were the first to alert us to the declines. Currently (8:06), TSLA is trading at $268.64 per share after a loss of $38.88 per share or 12.64% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on TSLA. In particular, we’re interested in following the story surrounding the SEC’s fraud suit against Musk and how it all pans out. Chances are that at the very least, the company will end up with a new CEO. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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