TSLA Tesla Inc

By Tim Higgins 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 2, 2020).

Tesla Inc. stock fell Friday morning after Chief Executive Elon Musk took to Twitter to say the auto maker's share price was "too high" in a series of messages he posted on the social-media platform.

Mr. Musk's tweets are only the latest of his missives that have drawn swift reaction from investors. Because of his history on Twitter, he is required by a court settlement to vet any message that might be material to Tesla, though the definition of what exactly must be reviewed has been a subject of dispute.

Asked whether he was joking or if he'd had his tweet vetted before posting it, Mr. Musk told The Wall Street Journal in an email simply: "No."

The latest episode on Twitter began Friday, at 8:10 a.m. California time where Tesla is based, Mr. Musk wrote on his verified Twitter account: "I am selling almost all physical possessions. Will own no house."

A minute later, he added: "Tesla stock price is too high imo" -- an abbreviation for "in my opinion."

Tesla shares, which had closed Thursday at $781.88, an 82% gain for the year, were down more than 9% in midday trading Friday after the Twitter messages.

Investor enthusiasm for Mr. Musk's ambitious growth plans for the electric car maker has sent shares soaring this year even amid fears of a prolonged recession from the coronavirus pandemic.

But Mr. Musk has been railing against authorities' efforts to stop the spread of the virus by shutting down nonessential businesses and keeping people at home. Tesla's lone U.S. assembly plant stopped production on March 23 because of such orders in California. On Wednesday, after Tesla suspended full-year car delivery guidance that had targeted more than 36% growth this year before the pandemic, he compared the effort to fascism and has taken to Twitter to argue for reopening the economy.

Mr. Musk reprised that theme on Friday. After his comment on Tesla's share price, Mr. Musk returned to Twitter four minutes later to say, "Now give people back their FREEDOM" and posted lines from the Star-Spangled Banner.

Since the coronavirus outbreak began to threaten the U.S., Mr. Musk has argued that the reaction to the pandemic is worse than the danger of Covid-19 itself. In recent days on Twitter, he has pointed to data that shows hospitals in California have been half empty, applauded Texas' efforts to relax restrictions and called Sweden's response, which has largely limited shelter-in-place orders to older people, "sensible."

The billionaire entrepreneur's behavior on Twitter has landed him in legal trouble. In 2018 he announced on the social-media platform that he was considering plans to take the auto maker private, a claim later deemed fraudulent by the Securities and Exchange Commission after it became clear he didn't have funding finalized for such a move.

He denied wrongdoing but eventually settled with a deal that included him giving up his position as chairman of Tesla and agreeing to have any of his Twitter messages relating to the auto maker's business reviewed before publishing them.

Tesla faces litigation from investors unhappy about losing money when shares soared after Mr. Musk said in 2018 that he had secured funding for the deal before the stock retreated over the following days as it became clear a transaction wasn't certain.

Earlier this week, the company revealed in a filing that it had decided not to renew insurance policies protecting its board of directors and officers from liability because of "disproportionately high premiums quoted by insurance companies." Instead, Mr. Musk personally agreed to provide coverage. Tesla didn't disclose why the premiums were so high.

Mr. Musk also has a history of posting exaggerated messages on Twitter during trying times. After the deal with the SEC to relinquish his chairman title, he took to Twitter to say he was giving up his title of CEO. "I'm now the Nothing of Tesla. Seems fine so far." A company filing with the SEC this week still listed Mr. Musk as CEO.

Tesla didn't respond to a request for comment on Mr. Musk's tweet or whether the CEO's comment on stock price had been vetted.

Mr. Musk found himself in the SEC's crosshairs again early last year when he posted messages on Twitter discussing the auto maker's projected production volumes. The SEC asked a federal judge to hold him in contempt for violating his 2018 settlement agreement.

The two sides eventually settled the dispute with an arrangement that more clearly articulated what matters for which Mr. Musk would need to seek a review before going public. While the latest version of the settlement agreement doesn't specifically mention comments about Tesla's share price, it says he needs to vet communications about "events regarding the company's securities."

Famed short-seller and Musk critic Jim Chanos appeared to weigh in almost immediately. A Twitter account controlled by Mr. Chanos's firm wrote: "The Musk tweet on the stock price is a material statement by anyone's standard. How is this not a clear violation of his Agreement? What is going on here?"

Mr. Musk has great incentive to see Tesla shares soar. He is on the verge of vesting the first tranche of stock options within a multi-year compensation package that could ultimately top $50 billion. The milestone is tied to Tesla's financial results and market value. Shares need to average enough to give the company a market value of $100 billion on average over the course of six months and 30 days. It is near that level now.

The first tranche of 1.69 million stock options under the arrangement nominally would net more than $700 million if sold immediately at Thursday's price, though Mr. Musk is required to keep the shares for five years after exercising the options.

A little more than an hour after he began posting messages on Twitter Friday, he added that his musician girlfriend Claire Boucher, known as Grimes, was mad at him. She is reportedly pregnant with his child. "Baby due on Monday," Mr. Musk wrote.

--Allison Prang contributed to this article.

Write to Tim Higgins at Tim.Higgins@WSJ.com

(END) Dow Jones Newswires

May 02, 2020 02:47 ET (06:47 GMT)

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