Tesla’s Elon Musk made a major blunder in August: he announced the potential for the stock to go private. On Twitter, of all places. As you might suspect, the announcement immediately triggered significant market disruption for the brand – that’s why such public statements are usually illegal in the first place. The SEC intervened, charging him with fraud; Musk settled for a $20,000,000 fine and giving up his role as a company chairman to become CEO.
• It all started with a tweet from the tech leader himself: “Am considering taking Tesla private at $420. Funding secured.” Musk continued to post back and forth on social media, assuring participants that shareholders would be protected.
• For a short time, it seemed as if people were assuming Tesla had already formalized the decision. Almost overnight, Tesla stocks jumped by nearly 10 percent and hovered there.
• After a sobering announcement from Tesla that they had yet to make a formal decision, stocks dropped slightly. Within a few weeks, the SEC had officially charged Musk with fraud, stating that he had acted recklessly because the decision was “uncertain” and subject to “numerous contingencies.”
• Just as quickly as it rose the first time, Tesla stocks plummeted by nearly 14 percent, losing more than they had gained from the original tweet. They continued to trend downward until Musk took a settlement, remaining at the helm as CEO without being a chairman.
• Despite being decried by analysts all across the country, who attempted to claim that this was the beginning of the end for Tesla, what happened next was somewhat surprising. Tesla stocks once again skyrocketed, significantly recovering from the shaky ground.
• By October 1, Tesla shares were back up to a remarkable $311. It’s a far cry from the original estimated $420 when Musk announced the potential for privatization, but still noteworthy.
• On October 2, TSLA lost some of that swift settlement recovery, dropping by around 5 percent to sit at $306.24. This “settling out” isn’t a sign of further instability (at least for now). Instead, it is a symptom that the rubber banding action is beginning to slow.
• As for whether Tesla will actually go private, it’s difficult to say for sure. Musk has shared other information pertaining to the shift, including the fact that he may be ready to close a deal with Saudi Arabia’s sovereign wealth fund. It isn’t yet known whether this deal will close, but when it does, more volatility is a likely response.