The euphoria over Tesla (NASDAQ: TSLA) and the leadership under CEO Elon Musk may be at an end. For years, Tesla enjoyed brand uniqueness and a technological lead over the big automotive companies. This is now under threat, after Musk tweeted a go-private proposal that did allegedly did not have the financial backing from private investors. Worse, now, is that the U.S. Securities and Exchange Commission is now suing Musk for causing harm to investors. Musk’s $420 go-private tweet looked like an attempt to short-squeeze bears. Short float topped 25.7%.
Musk’s emotionally-driven tweet caught the SEC’s attention. By asserting a buyout when funding was not secured, the communication violated the Securities Exchange Act. High-level executives knew in advance that the company would face such headwinds, opting to quit before the SEC filed the suit. Instead of spending valuable time and money on defending itself, Musk is settling with the SEC. The conclusion to this fiasco could have been worse. Had Musk exited the firm, it would add to uncertainties in the leadership team.
Tesla’s medium-term issues are operational, so the company still needs to hire competent leaders to fix this aspect of the company’s problems. Ramping up production of the affordable Tesla 3 is the company’s first priority. Mercedes-Benz, BMW, and Jaguar Land Rover are all pushing their latest EVs to market. This could threaten to take Tesla’s market share.
