A recent story published by Fortune criticizes the timing of Tesla’s May 18 sale of more than $2 billion worth of stock which incidentally took place before any announcement was ever made that Joshua Brown was killed just 10 days earlier after his Model S on Autopilot crashed into a tractor trailer. According to the media outlet, they attempted to notify Tesla on July 4 that they would be running a story on this matter, to which Tesla PR replied that Brown’s death was not material to investors. Fortune on the other hand drew references to the $6 decline in stock price soon after the NHTSA announced it was opening an investigation into the accident as validation that the information was material and should have been disclosed.
Then things got interesting. Elon Musk himself joined the e-mail exchange. At first Musk was under the impression that Fortune was questioning the price at which the stock was sold on May 18. But when the writer clarified the point of the story by saying it was focusing on Tesla’s failure to disclose material information, that’s when Musk got testy.
He fired back, “Indeed, if anyone bothered to do the math (obviously, you did not) they would realize that of the over 1M auto deaths per year worldwide, approximately half a million people would have been saved if the Tesla autopilot was universally available. Please, take 5 mins and do the bloody math before you write an article that misleads the public.”
Musk then took to Twitter to fire off a sarcastic comment aimed at Fortune Editor Alan Murray saying that the story was only “material” for Fortune as it helped them generate ad dollars.
@alansmurray Yes, it was material to you — BS article increased your advertising revenue. Just wasn't material to TSLA, as shown by market.
— Elon Musk (@elonmusk) July 5, 2016
So, a story about misleading investors got morphed into a story about misleading readers. Sounds like a draw. Except that shareholder suits over claims that a company failed to disclose a material piece of information are quite common. In the end, the issue of who misled who may wind up being decided not in an e-mail exchange but in a court of law.
Fortune has released a new story citing Tesla’s SEC filing which warned investors that a fatal crash related to its Autopilot feature would be a material event to “our brand, business, prospects, and operating results.” According to Fortune, the disclosure said that the company may face product liability claims due to “failures of new technologies that we are pioneering, including autopilot in our vehicles,” adding that “product liability claims could harm our business, prospects, operating results and financial condition.
H/T Marco Papa