Tesla’s Elon Musk and SEC reach agreement on Twitter use: no punishment, but tighter rules

Simon Alvarez

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Posted on April 26, 2019

Tesla CEO Elon Musk and the Security and Exchange Commission have reached an agreement about the CEO’s Twitter use. In a document, Elon Musk’s legal team and the SEC issued a motion requesting the court to amend the terms of the CEO’s settlement, particularly the sections pertaining to information that are considered material, and thus, requiring approval.

The motion comes after Elon Musk’s legal team and the SEC asked the court for an extension to settle the contempt charges filed by the agency against the CEO. The agency took issue with Musk’s tweet back in February 19, when he mentioned on Twitter that Tesla will produce around 500,000 cars this year, echoing an estimate he shared during the Q4 2018 earnings call. The SEC asked the court to hold Musk in contempt for violating his settlement with the agency, which required pre-approval of tweets that contain material information.

The two sides faced off on April 4, with the SEC reiterating its accusations before presiding Judge Alison Nathan. After hearing the arguments from the agency and Musk’s legal team, Judge Nathan ordered the two parties to arrange a meeting and send a letter to the court within two weeks. The judge also told the SEC and Musk’s team to come up with an agreement. “My call to action is for everyone to take a deep breath, put your reasonableness pants on and work this out,” she said.

Based on the motion filed by the parties today, it appears that Elon Musk will not be paying a fine for his February 19 tweet, though the document outlined a series of topics that are deemed material. Following is the section of the joint filing outlining topics that require review and pre-approval.

  • potential or proposed mergers, acquisitions, dispositions, tender offers, or joint ventures;
  • production numbers or sales or delivery numbers (whether actual, forecasted, or projected) that have not been previously published via pre-approved written communications issued by the Company (“Official Company Guidance”) or deviate from previously published Official Company Guidance;
  • new or proposed business lines that are unrelated to then-existing business lines (presently includes vehicles, transportation, and sustainable energy products);
  • projection, forecast, or estimate numbers regarding the Company’s business that have not been previously published in Official Company Guidance or deviate from previously published Official Company Guidance;
  • events regarding the Company’s securities (including Musk’s acquisition or disposition of the Company’s securities), credit facilities, or financing or lending arrangements;
  • nonpublic legal or regulatory findings or decisions;
  • any event requiring the filing of a Form 8-K by the Company with the Securities and Exchange Commission, including:
  • a change in control; or
  • a change in the Company’s directors; any principal executive officer, president, principal financial officer, principal accounting officer, principal operating officer, or any person performing similar functions, or any named executive officer; or
  • such other topics as the Company or the majority of the independent members of its Board of Directors may request, if it or they believe pre-approval of communications regarding such additional topicswould protect the interests of the Company’s shareholders; and Jugement decided… the proposed amendment to the Final Judgment is fair, reasonable, and in the interest of the parties and investors because the proposed revisions will provide additional clarity regarding the written communications for which the Defendant is required to obtain pre-approval pursuant to the Final Judgment

Below is the joint motion outlining the agreement between Elon Musk’s legal team and the Securities and Exchange Commission.

Tesla’s Elon Musk and SEC reach agreement on Twitter use: no punishment, but tighter rules

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Tesla drops 4% and hits 2-year lows, but TSLA bulls remain undeterred

Simon Alvarez

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Posted on April 26, 2019

Tesla stock (NASDAQ:TSLA) dropped 4% on Friday as the electric car maker continued to feel the aftermath of its Q1 financial report. As Tesla hit 2-year lows, Wall Street continued to be polarized about the company, with bears piling on the skepticism and TSLA bulls remaining firm in their support for the electric car maker.

Seemingly smelling blood in the water, Tesla bears continued their attacks on the company. Gabe Hoffman, founder of Accipiter Capital Management and a Tesla short, called Elon Musk a “lying magician” during a segment of Yahoo Finance‘s The Ticker. Garrett Nelson, CFRA senior research analyst, noted that the company’s guidance looks “unrealistic” and a “problem going forward.” Longtime TSLA bull Dan Ives from Wedbush also wrote a scathing note following Tesla’s Q1 earnings call, describing the first quarter as a “top debacle.”

While the current state of Tesla stock does not inspire much confidence, some of the company’s bulls have remained supportive of the electric car maker. Jefferies analyst Philippe Houchois noted that while there is “ongoing stress,” for Tesla, he saw “enough positive surprises from auto gross margin resilience, cash earnings, and gross liquidity to argue the shares have sufficiently re-priced.” Houchois admitted that his current call might be “hard to live with at times,” but he maintained that he sees value in Tesla’s electric vehicle/connectivity technology and implementation.

Arguably taking an unpopular opinion, the Jefferies analyst stated that he remained confident that “there is a path to sustained profitability” for the electric car maker. Houchois ultimately kept his “Buy” rating on TSLA stock, as well as a very optimistic $400 price target.

ARK Invest CIO Cathie Wood, a long-term TSLA bull, discussed Tesla’s first quarter results in a segment of CNN‘s First Move. According to Wood, the electric car maker’s Q1 numbers might be provocative, but they are not really a surprise. “The numbers looked provocative. I will say that from the get-go. But we knew this was going to be a tough quarter. We knew they were retooling. We knew that they were going to pay back the convertible notes. So there’s going to be a cash drain. I don’t think there were too many surprises,” she said.

In a rather interesting twist, Craig Irwin of Roth Capital Partners, has turned less bearish on Tesla following the Q1 earnings call. Irwin is a Tesla critic, recently claiming that the electric car maker will be in trouble because of competition from legacy auto. In a segment on CNBC‘s Squawk Box, Irwin explained why he currently rates Tesla as a hold. “(The Q1 results were) very much as telegraphed. I mean, we’ve known the units for a while. Nothing gets me more constructive here, but frankly, I’m not more bearish. I just think that the probability of an equity offering or some capital access is much, much higher with the cash position down as much as it was,” he said.

With Friday’s 4% drop, TSLA shares have now fallen 29% in 2019. Tesla’s market cap has also declined from $63 billion in mid-December to $40.8 billion. Wall Street analysts currently expect the electric car maker’s revenue to expand 19% in 2019, far less than the 83% growth it exhibited in 2018 and the 68% growth in 2017, according to Refinitiv.

As of writing, Tesla stock is trading 4.77% at $235.81.

Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.

Tesla drops 4% and hits 2-year lows, but TSLA bulls remain undeterred

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Tesla owners set to win legislative protection from Supercharger blocking in CO

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Posted on April 25, 2019

The Colorado electric vehicle (EV) community is set to benefit from legislation that will fine gas-powered violators for parking in EV charging spaces. The penalty prescribed is $150 plus a $32 surcharge.

The bill, HB19-1298, recently passed the state congressional house and corresponding senate committee, and it now awaits a final vote in the Senate before signature by Colorado Governor Jared Polis. Once enacted, the Centennial State will join ten other states with similar laws, many of them with substantial financial penalties as well.

The legislative charge in Colorado is being led by local Tesla owners feeling especially impacted by the blocking incidents, nicknamed “ICEing” in reference to the internal combustion engines of the violators. Tesla owner, YouTuber, and President of the Denver Tesla Club, Sean Mitchell, took the community’s frustration with electric vehicle owners’ lack of options for dealing with ICEing directly to his local representatives and has been rallying for the case ever since. His efforts were backed by Margaret-Ann Leavitt, vice president of Denver-based National Car Charging, and both advocates were recently featured in a local paper highlighting both their cause and their coming legal victory.

Internet forums and social media are full of sightings where Superchargers are being blocked by ICE vehicles, some even maliciously as a statement against zero emissions cars overall. Given the benefit of the doubt, however, most instances of gas-powered vehicles blocking EV chargers are a matter of location, convenience, and in places without means of enforcement, unimpeded if a driver chooses to ignore the purpose of a charging location.

The legislation in Colorado doesn’t come without detractors. “This is a solution looking for a problem,” Tim Jackson, CEO of the Colorado Automobile Dealers Association (CADA) representing 260 dealers in the state, was quoted as saying in The Colorado Sun article featuring the bill. He cited the EV chargers located in the CADA parking lot, noting that he could “count on one hand” the number of times an electric car wasn’t able to use them due to ICEing. He failed to mention, though, that the chargers on CADA’s property ban Tesla vehicles specifically from using them, which does not bode well for the association’s supposed neutrality on the issue.

Another argument made by an opposing legislator was the preference EVs would be given over other cars needing special parking treatment such as large vehicles. When smaller vehicles fill those spots despite reservation signs, the larger cars’ options are limited or eliminated from the immediate area. This comparison may be relevant when only focused on the issue of reserved parking space violations, but considering the miles-long distances between Supercharger/EV charger locations vs. locations for big cars to park, the larger vehicle issue doesn’t seem to align with the purpose of the bill at hand.

Tesla itself is aware of the ICEing problem and has recently been spotted testing its own countermeasures. In Taiwan, a member of the Tesla owner community posted a video of a ground lock that used camera-based identification for deactivation to ensure only Tesla vehicles could park in the space without damage. Tesla China was also seen testing a similar device using QR codes for deactivation.

Overall, the growing presence of electric vehicles throughout the US will continue to bring changes to the existing transportation industry as it adapts to their particular needs. As seen in this recent example in Colorado, advocacy may be necessary in cases where local government isn’t immediately aware of the changes needed, but the effort can prove worthwhile.

Tesla owners set to win legislative protection from Supercharger blocking in CO

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