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All Posts Term: Tesla
4 post(s) found

Tesla Stock Soars After Musk Settles With SEC

Elon Musk taunted the SEC with his tweet "naughty by nature."

The value of Tesla stock has risen over 16% in trading last Monday following Elon Musk's signing of a deal with the SEC on the weekend. The gains on Monday erased the 14% decline of Tesla stock on Friday after the lawsuit was filed late Thursday by the SEC.

The dispute between Musk and the SEC occurred after Musk tweeted on August 7 that he had secured the funding needed to take Tesla private at a price of $420 a share. However, it soon became obvious that the commitment for this funding by the sovereign wealth fund of Saudi Arabia had only been made informally.  

For this reason, on Thursday the SEC filed a suit against Musk charging securities fraud. At first, Musk claimed he was going to fight against the charges, but following the rapid decline of Tesla's stock price, he reconsidered his position and settled the lawsuit on Saturday.

Insider Buying And Those That Got Caught

ElonMusk

Recent news of Elon Musk, CEO of Tesla and SpaceX, being investigate for Insider Buying has everyone looking for how this could happen and who in the past has been prosecuted for insider trading. It’s usually hedge fund owners that get in trouble for insider trading but there have been others including Martha Stewart, George Soros, and Marylin Star. When someone purchases stock on insider knowledge not available to the public, they can be prosecuted.

Elon Musk

On August 7th of last month, Tesla CEO Elon Musk tweeted that he had secured funding to take the company private from Saudi sources at the price of $420/share. This public announcement caused the price of the stock to climb dramatically (8 percent) before being halted. The problem is that Musk had never made a public announcement about the company in this fashion before. And he could be in trouble if the price per share is inaccurate or all the funding is not actually secured. Look for private investors to sue Musk for his announcement if they feel they lost money because of the public announcement on Twitter.

Martha Stewart

Martha Stewart got in trouble in 2004 for insider trading of ImClone stock and had to serve 5 months in prison with an additional 2 years of supervised time including some home confinement. Stewart sold ImClone stock two days prior to the stock falling 16% after an FDA decision on the biotech’s most important drug. She avoided $45,000 in loses by selling when she did. It was discovered that she acting on advise from a financial advisor who had knowledge of ImClone CEO Sam Waksal selling $5 million of the stock. The reason he was selling was unknow at the time. Because she did not know the reason for the trade and did not have company information at her disposal, she was not charged with insider trading. But she obstructed justice during the investigation and was sentence for that crime.

Why Runaway Stories Get Built

May 16 2017
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Tesla_Model_S_Indoors_trimmed

Professor Aswath Damodaran, based at New York University's Stern School of Business, recently participated in a Google discussion session which focused on the value of using stories in business. The discussion centered on how businesses value their stocks by having a compelling story that justifies its financial assumptions.

Professor Damodaran explained how stocks can become runaway stories, which is basically a story that investors firmly believe in. This may lead to them avoiding asking important questions about the company.

He used Tesla Inc (TSLA) as an example of a runaway story, explaining how he had written an analysis of the company in September 2013, in which he estimated Tesla's stock value to be only $67.12 per share even though it was trading at over $168 per share at that time.

Analyst Predicting a 30% Increase in Tesla Stock

tesla

Tesla stock (TSLA) has done well over the past three months and beaten the overall market this past year. Yet analyst at Baird felt the stock could improve an additional 30% this year while keeping their current rating of a buy on the stock. This relates to a move from the current $275/share to $335.

The shareholder meeting tomorrow is one thing the company feels could propel the stock higher. CEO Elon Musk tends to make big announcements about new products and company direction at this meetings. Last time Musk announced that he would stay at the helm of the company for at least 4 more years and spoke about the direction of the company towards automatic driving.

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