US government had Sued Elon Musk, CEO of Tesla, for his efforts to take Tesla private, at $420 a share. Although Musk has alleged that SEC’s suit was “unjustified”, recent news says that he has reached a settlement with the lawsuit brought by the SEC over the series of his tweets in August. According to the US Settlement and Exchange Commission (SEC) agreement, Elon Musk and the company are entitled to pay a penalty fee of $20 million.
As part of a separate settlement, Tesla will also be required to pay $20 million as a fine amount and add two new independent directors. Also, Musk will have to be removed from his position as the Chairperson at Tesla for a minimum of three years. However, Musk will continue working as the CEO.
Following Musk’s settlement, Tesla’s shares saw a rise by 15% to $306.5 at 6:28 PM by New York’s time, covering up for its Friday’s 14% plunge after SEC officially announced its suit against Musk. Before the announcement, Tesla’s shares closed at $307.52 on Thursday.
Finally, the settlement as evaded a prolonged case that would have hindered Tesla’s expanding production of the Model 3 Sedan which depends the firm’s future. Now all eyes are on Tesla; whether it can meet all its production goals by the third quarter of Sunday midnight will determine a lot of its future.
Despite the stock’s massive slide from last year’s peak, Tesla is still valued at $45.2 billion in the stock market. Shareholders are at a point of bet that the company is on the pivot of turning again owing to its lower-priced Model 3 sedan. Short sellers, however, have alleged that the company is required to raise billions of dollars more in financing. They have raised issues about the company’s woeful quality control and are certainly not happy with an unfocused, confused CEO.
Musk, as noted, believes that the company will positively have profitable cash flow in the third and fourth quarters of the year. He has also sent an email to the employees to boost them in completing all the deliveries by the end of the quarter’s final day.
It’s the need of the hour to hear out fresh and independent voices on the board of directors after such a topsy-turvy situation.