‘Kid playing with firecrackers’: Elon Musk deletes tweet saying Tesla will soon become the world’s biggest company

Tesla stock spiralled on Wall Street, shedding 3.4 per cent by market close following a flurry of news about chief executive Elon Musk’s Twitter activity.

Musk boasted early on Friday (US time) to his nearly 50 million Twitter followers that his company could be “the biggest” in a few months. It came less than a day after the National Labor Review Board upheld a 2019 ruling that determined Tesla engaged in unfair labour practices and called on the company to have Musk delete a tweet from 2018.

Elon Musk’s activity on Twitter has landed him in hot water before.Credit:AP

After a subdued morning, shares shed as much as 5.6 per cent on Friday (US time) before inching back. Tesla closed at $US618.71, down 3.4 per cent, and its market cap tumbled more than $US19 billion to $US593.8 billion.

Tesla’s performance ran counter to the broader market’s advance. The Dow Jones industrial average added 453 points, or nearly 1.4 per cent; the S&P 500 climbed 65 points, or almost 1.7 per cent; while the tech-heavy Nasdaq jumped 161 points, or 1.2 per cent.

Musk tweeted, “I think there is a >0 per cent chance Tesla could become the biggest company,” in response to Twitter user who stated that the electric car manufacturer could be bigger than Apple and tagged Musk.

Another user responded, “I love the direction of that arrow!” To which Musk replied: “Probably within a few months.”

That tweet has since been deleted, but screenshots from multiple users who posted Musk’s tweets showed the early-morning declarations.

Tesla fans quickly reacted, urging other Twitter users to delete screenshots of those tweets over fears the US Securities and Exchange Commission might take notice. Others called for Tesla fans to buy more stock.

The federal regulator declined to comment. A Tesla representative did not respond to a request for comment.

Dan Ives, the managing director of equity research for Wedbush Securities, called Musk’s Twitter barrages a frustration for investors, though he said he’s not anticipating any action from regulators.

“Elon is Elon, and that’s part of his interaction with his followers and commenting on a range of issues. But when it comes to some of these tweets, it’s like a kid that keeps playing with firecrackers,” he said. “Right now, investors don’t want to see any noise or sideshows from Tesla and Musk. They just want to see results, deliveries, and ultimately something that would drive the stock higher.”

Harvey Pitt, the CEO of consulting firm Kalorama Partners who served as SEC chairman from 2001 to 2003, said the regulator has a few options in such cases, including seeking the appointment of a corporate monitor to curb Twitter activity. “As to how far the SEC is willing to go, that’s a very different question,” he said in an email. “It’s not clear how strong a case the SEC can make against this latest round of tweets.”

Musk’s tweets have been the subject of amusement, investor lawsuits and a securities fraud charge by the SEC.

In September 2018, the agency charged Musk with securities fraud after he tweeted to his followers that he could take Tesla private at $US420 per share and that he already had the funding to do so – just pending a shareholder vote. The SEC alleged that the “series of false and misleading tweets” caused Tesla’s stock price to jump more than 6 per cent that day and significantly disrupted the market. Musk and Tesla ultimately reached a settlement with the SEC, with each paying a $US20 million penalty, and Musk had to step down from his position as chairman of the board for three years.

Tesla is facing growing competition in the electric vehicle market.Credit:Bloomberg

In April 2019, that settlement was amended to establish oversight for Musk’s Twitter activity, in which Tesla’s securities lawyers would need to pre-approve any communication about the company’s financial condition.

Earlier this month, Tesla investor Chase Gharrity filed a lawsuit over Musk’s “erratic” tweets that he said influenced the markets and cost shareholders billions of dollars in losses, Reuters reported. One of the tweets named in the complaint was from May, when Musk tweeted “Tesla stock price is too high imo” and Tesla stock price fell by 10 per cent.

And Musk’s latest Twitter spiel comes just one day after the National Labor Relations Board called on Tesla to have Musk delete a tweet from 2018 discouraging unionisation and rehire a former employee the company fired, upholding a 2019 administrative law judge ruling that stated the company engaged in unfair labour practices.

Ives pointed out Tesla’s rising competition in the electric vehicle market – with automakers General Motors, Volkswagen and Ford now jumping into production – as a reason for the company to focus on its products instead of boasting about expectations for growth.

“When the stock’s moving up on a parabolic run and Musk has the golden touch, he can’t do anything wrong. But it’s also understanding right now the environment for EVs,” he said. “It’s no longer just Tesla running the show. It’s a ‘prove me’ time, not only for Tesla but for Musk.”

Tesla is expected to release its quarterly earnings in late April or early May. David Whiston, US autos equity analyst for Morningstar, said in an emailed note that investors should look at the company’s performance long-term.

“I think what matters for Tesla is what does the company look like 5, 10, 20 years from now rather than what the stock does over the next few months,” he said. “As for scrutiny, I’m not concerned as long as Elon behaves enough to not have the SEC ban him from being an officer in a public company.”

Bloomberg

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