Investor's Corner

Elon Musk’s ‘reckless conduct’ on Twitter highlighted by SEC in fiery rebuttal

Published

6 years ago

March 19, 2019

Simon Alvarez

The Securities and Exchange Commission (SEC) has issued a fiery response to the points outlined by Elon Musk’s legal team last week, which saw the Tesla CEO take a firm stand against the allegations of the agency. According to the SEC’s response, Musk must be held in contempt because his “reckless actions” on social media have been “stunning.”

Musk’s ‘stunning’ conduct

The SEC filed its rebuttal of Musk’s points on Monday, arguing that Musk has made no diligent or good faith effort to comply with the pre-approval provision of the court’s order. The SEC also pointed out that none of Elon Musk’s tweets since he reached a settlement with the agency last year were screened before they were posted online.

“The pre-approval requirement was designed to protect against reckless conduct by Musk going forward. It is therefore stunning to learn that, at the time of filing of the [contempt] motion, Musk had not sought pre-approval for a single one of the numerous tweets about Tesla he published in the months since the court-ordered pre-approval policy went into effect. Musk reads this Court’s order as not requiring pre-approval unless Musk himself unilaterally decides his planned tweets are material. His interpretation is inconsistent with the plain terms of this Court’s order and renders its pre-approval requirement meaningless” the agency wrote.

Material Information

The agency also argues that Musk’s February 19 tweet, where he noted that Tesla would produce around 500,000 vehicles in 2019, was material information to Tesla and its shareholders. The agency added that the frequency of Tesla’s references to its production forecast in its public statements is proof that such statements are material for the company.

“Musk’s recognition of the significance of Tesla’s vehicle production forecasts to investors is evidenced by the frequency with which he and Tesla highlight such forecasts in their public statements. For years and continuing through the company’s most recent earnings release, Tesla and Musk have prominently featured vehicle production forecasts in their public communications, including Tesla’s investor letters, Musk’s tweets, and the company’s filings with the SEC. While some companies emphasize forward-looking guidance on financial metrics such as revenue and earnings per share, Tesla often highlights guidance regarding expected production rates and deliveries. Given this focus on Tesla’s production capabilities, Musk cannot credibly argue that his statement, as Tesla’s CEO, that the company ‘will make around 500k’ cars in 2019 could not have reasonably contained information material to Tesla and its investors,” the SEC argued.

Disclosures

The SEC further argued that Musk’s tweet was different from the previous public disclosures. Tesla’s Q4 2018 and Full Year Update Letter noted that the company is expecting to deliver 360,000 to 400,000 vehicles in 2019, though Musk later pointed out in the earnings call that Tesla is aiming to produce around “maybe in the order of 350,000 to 500,000 Model 3s” this 2019. The SEC does not recognize Musk’s statement in the earnings call.

“Disputing the logical conclusion that new information about a critical company metric reasonably could be material to Tesla’s shareholders, Musk claims that the 7:15 tweet ‘simply was not ‘news.’’ It is frankly difficult to follow Musk’s tortured analysis, which attempts to cobble together information from various public statements by Tesla in January 2019 to arrive at the post hoc conclusion that his 7:15 tweet was ‘within previously disclosed ranges.’ Regardless, Musk’s arguments do not change the fact that, before the 7:15 tweet, Tesla had never disclosed that it planned to make around 500,000 cars in 2019. Therefore, Musk was required to obtain pre-approval before he published this statement.

“Prior to the 7:15 tweet, Tesla had not publicly disclosed any forecast of the total number of vehicles it expected to produce in 2019. This should end the Court’s inquiry as to whether Musk’s failure to seek pre-approval constituted a violation of the Court’s order. In the absence of an affirmative forecast on this important topic, Musk’s tweet contained new information that could reasonably have been material to Tesla and its shareholders.

“Tesla had, however, previously provided a clear forecast of total vehicle deliveries in 2019. Specifically, Tesla’s January 30, 2019 Fourth Quarter & Full Year Update (‘Update Letter’) stated, “In total, we are expecting to deliver 360,000 to 400,000 vehicles in 2019 . . . .” Tesla included the same delivery forecast in the pre-approved talking points for its January 30 earnings call. Evidently at a loss as to how to explain the material difference between the company’s repeated deliveries guidance and his 7:15 tweet, Musk’s brief does not even mention the deliveries guidance.

“Instead, Musk argues that his tweet could not reasonably have been material because Tesla previously stated that it was ‘targeting’ an annualized production rate in excess of 500,000 Model 3 vehicles sometime between Q4 of 2019 and Q2 of 2020. This guidance was also given in Tesla’s 2018 Form 10-K and during Tesla’s January 30 earnings call. But this was a qualified forecast (‘targeting’) of Tesla’s expected achievement of a production run rate (not of aggregate production) for a particular vehicle line at some future point in time (somewhere between late 2019 and the middle of 2020). On its face, the 7:15 tweet—which stated that Tesla will make around 500,000 cars in 2019—was materially different from Tesla’s production rate forecasts for Model 3.”

The skirmish continues

The release of the SEC’s response to Elon Musk’s stance would likely cause more volatility for Tesla and the performance of its stock (NASDAQ:TSLA). The agency and the CEO have clashed a number of times over the past year, and Tesla shareholders have been, for the most part, adversely affected. With the SEC’s response showing that the battle between Musk and the agency will likely continue, Tesla shareholders and those that follow the company closely would best be prepared for more ripples along the way.

A decision on the SEC’s request to hold Elon Musk in contempt of court for his February 19 tweet will be decided by the US District Court for Southern New York, the same office which which the CEO and the agency’s settlement last October.

The SEC’s rebuttal of Elon Musk’s arguments could be accessed here.

Related Topics:$TSLA Elon Musk Tesla Tesla Model 3 Top Story

Up Next

Tesla pickup truck imagined in fan renders by community

Don't Miss

Tesla retires the Mid Range Model 3, leaving only Standard and Long Range

Simon Alvarez

Simon is an experienced automotive reporter with a passion for electric cars and clean energy. Fascinated by the world envisioned by Elon Musk, he hopes to make it to Mars (at least as a tourist) someday. For stories or tips--or even to just say a simple hello--send a message to his email, simon@teslarati.com or his handle on X, @ResidentSponge.

Comments

Investor's Corner

Shareholder group urges Nasdaq probe into Elon Musk’s Tesla 2025 CEO Interim Award

The SOC Investment Group represents pension funds tied to more than two million union members, many of whom hold shares in TSLA.

Published

4 days ago

August 22, 2025

Simon Alvarez

Credit: xAI/X

An investment group is urging Nasdaq to investigate Tesla (NASDAQ:TSLA) over its recent $29 billion equity award for CEO Elon Musk.

The SOC Investment Group, which represents pension funds tied to more than two million union members—many of whom hold shares in TSLA—sent a letter to the exchange citing “serious concerns” that the package sidestepped shareholder approval and violated compensation rules.

Concerns over Tesla’s 2025 CEO Interim Award

In its August 19 letter to Nasdaq enforcement chief Erik Wittman, SOC alleged that Tesla’s board improperly granted Musk a “2025 CEO Interim Award” under the company’s 2019 Equity Incentive Plan. That plan, the group noted, explicitly excluded Musk when it was approved by shareholders. SOC argued that the new equity grant effectively expanded the plan to cover Musk, a material change that should have required a shareholder vote under Nasdaq rules.

The $29 billion package was designed to replace Musk’s overturned $56 billion award from 2018, which the Delaware Chancery Court struck down, prompting Tesla to file an appeal to the Delaware Supreme Court. The interim award contains restrictions: Musk must remain in a leadership role until August 2027, and vested shares cannot be sold until 2030, as per a Yahoo Finance report.

Even so, critics such as SOC have argued that the plan does not have of performance targets, calling it a “fog-the-mirror” award. This means that “If you’re around and have enough breath left in you to fog the mirror, you get them,” stated Brian Dunn, the director of the Institute for Comprehension Studies at Cornell University.

They don’t even HAVE an investment with Tesla. They are just a political activist group using a loose relationship with a “coalition of unions” to write letters to advance an agenda that IS NOT making Tesla and AI, robotics and energy leader. Their letter does not include any…— Amy (@_SFTahoe) August 21, 2025

SOC’s Tesla concerns beyond Elon Musk

SOC’s concerns extend beyond the mechanics of Musk’s pay. The group has long questioned the independence of Tesla’s board, opposing the reelection of directors such as Kimbal Musk and James Murdoch. It has also urged regulators to review Tesla’s governance practices, including past proposals to shrink the board.

SOC has also joined initiatives calling for Tesla to adopt comprehensive labor rights policies, including noninterference with worker organizing and compliance with global labor standards. The investment group has also been involved in webinars and resolutions highlighting the risks related to Tesla’s approach to unions, as well as labor issues across several countries.

Tesla has not yet publicly responded to SOC’s latest letter, nor to requests for comment.

The SOC’s letter can be viewed below.

Nasdaq+Letter Tsla Socig Final by Simon Alvarez

Investor's Corner

Tesla investors may be in for a big surprise

All signs point toward a strong quarter for Tesla in terms of deliveries. Investors could be in for a surprise.

Published

2 weeks ago

August 14, 2025

Joey Klender

(Credit: Tesla)

Tesla investors have plenty of things to be ecstatic about, considering the company’s confidence in autonomy, AI, robotics, cars, and energy. However, many of them may be in for a big surprise as the end of the $7,500 EV tax credit nears. On September 30, it will be gone for good.

This has put some skepticism in the minds of some investors: the lack of a $7,500 discount for buying a clean energy vehicle may deter many people from affording Tesla’s industry-leading EVs.

Tesla warns consumers of huge, time-sensitive change coming soon

The focus on quarterly deliveries, while potentially waning in terms of importance to the future, is still a big indicator of demand, at least as of now. Of course, there are other factors, most of them economic.

The big push to make the most of the final quarter of the EV tax credit is evident, as Tesla is reminding consumers on social media platforms and through email communications that the $7,500 discount will not be here forever. It will be gone sooner rather than later.

It appears the push to maximize sales this quarter before having to assess how much they will be impacted by the tax credit’s removal is working.

Delivery Wait Time Increases

Wait times for Tesla vehicles are increasing due to what appears to be increased demand for the company’s vehicles. Recently, Model Y delivery wait times were increased from 1-3 weeks to 4-6 weeks.

This puts extra pressure on consumers to pull the trigger on an order, as delivery must be completed by the cutoff date of September 30.

Delivery wait times may have gone up due to an increase in demand as consumers push to make a purchase before losing that $7,500 discount.

More People are Ordering

A post on X by notable Tesla influencer Sawyer Merritt anecdotally shows he has been receiving more DMs than normal from people stating that they’re ordering vehicles before the end of the tax credit:

Anecdotally, I’ve been getting more DMs from people ordering Teslas in the past few days than I have in the last couple of years. As expected, the end of the U.S. EV credit next month is driving a big surge in orders.

Lease prices are rising for the 3/Y, delivery wait times are… pic.twitter.com/Y6JN3w2Gmr

— Sawyer Merritt (@SawyerMerritt) August 13, 2025

It’s not necessarily a confirmation of more orders, but it could be an indication that things are certainly looking that way.

Why Investors Could Be Surprised

Tesla investors could see some positive movement in stock price following the release of the Q3 delivery report, especially if all signs point to increased demand this quarter.

We reported previously that this could end up being a very strong rebounding quarter for Tesla, with so many people taking advantage of the tax credit.

Whether the delivery figures will be higher than normal remains to be seen. But all indications seem to point to Q3 being a very strong quarter for Tesla.

Elon Musk

Tesla bear Guggenheim sees nearly 50% drop off in stock price in new note

Tesla bear Guggenheim does not see any upside in Robotaxi.

Published

2 weeks ago

August 14, 2025

Joey Klender

Credit: Tesla

Tesla bear Guggenheim is still among the biggest non-believers in the company’s overall mission and its devotion to solving self-driving.

In a new note to investors on Thursday, analyst Ronald Jewsikow reiterated his price target of $175, a nearly 50 percent drop off, with a ‘Sell’ rating, all based on skepticism regarding Tesla’s execution of the Robotaxi platform.

A few days ago, Tesla CEO Elon Musk said the company’s Robotaxi platform would open to the public in September, offering driverless rides to anyone in the Austin area within its geofence, which is roughly 90 square miles large.

Tesla CEO Elon Musk confirms Robotaxi is opening to the public: here’s when

However, Jewsikow’s skepticism regarding this timeline has to do with what’s going on inside of the vehicles. The analyst was willing to give props to Robotaxi, saying that Musk’s estimation of a September public launch would be a “key step” in offering the service to a broader population.

Where Jewsikow’s real issue lies is with Tesla’s lack of transparency on the Safety Monitors, and how bulls are willing to overlook their importance.

Much of this bullish mentality comes from the fact that the Monitors are not sitting in the driver’s seat, and they don’t have anything to do with the overall operation of the vehicle.

Musk also said last month that reducing Safety Monitors could come “in a month or two.”

Instead, they’re just there to make sure everything runs smoothly.

Jewsikow said:

“While safety drivers will remain, and no timeline has been provided for their removal, bulls have been willing to overlook the optics of safety drivers in TSLA vehicles, and we see no reason why that would change now.”

He also commented on Musk’s recent indication that Tesla was working on a 10x parameter count that could help make Full Self-Driving even more accurate. It could be one of the pieces to Tesla solving autonomy.

Jewsikow added:

“Perhaps most importantly for investors bullish on TSLA for the fleet of potential FSD-enabled vehicles today, the 10x higher parameter count will be able to run on the current generation of FSD hardware and inference compute.”