Tesla shares plummeted a day after an interview with CEO Elon Musk painted a picture of an exhausted leader struggling to handle one of the company's most hard periods.
Investors must have gotten unnerved.
But on Friday, the Associated Press was reporting in a tweet that Tesla shares were dropping and the S.E.C investigation was getting larger "amid questions of CEO Musk's ability to run [the] company".
Shares of Tesla dropped 6 percent following reports of a widening SEC probe and amid questions of Musk's ability to run the company.
Musk claimed he wanted to offer a 20 percent premium over what the Tesla stock had previously been worth, according to an interview he had with The New York Times. "The worst is over from a Tesla operational standpoint, but from a personal pain standpoint, the worst is yet to come".
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Now, experts say Tesla has reached an intersection where the board must decide the direction of its leadership. "They can have the reins right now", he said. Experts say regulators likely are investigating if Musk was truthful in the tweet about having the financing set for the deal. "I was not on weed (while tweeting), to be clear", he said.
Mr Musk, who is dating Canadian singer Grimes, 30, last week caused havoc in the markets after tweeting, in the middle of the night, that he hoped to take the publicly traded company private.
"I definitely did not get calls from irate directors", he said.
Erik Gordon, a University of MI business and law professor, told The Associated Press that Tesla's board now has a fiduciary duty to shareholders to take action. By early Friday afternoon, Tesla's shares had fallen over 8 per cent, wiping about US$4 billion off the company's value. Tesla later disclosed that Musk had talked with the Saudi Arabia government investment fund about a deal. By Musk's own admission, he has been burning it on all sides while Tesla struggles to crank out thousands of its first mass-market vehicle, the Model 3 sedan.
The interview and other actions, Gordon said, are signs that Musk no longer can handle the CEO job.
The WSJ recalls that Elon Musk has made bold predictions for Model 3 production, but real production numbers fell short of these until this June, when Tesla finally ramped up the weekly production of the Model 3 to 5,000. So short-sellers only benefit when the company - and Musk himself - fails.