Tesla, Inc. TSLA CEO Elon Musk, who has publicly lashed out at the media, government regulators and Wall Street short sellers, has a new target this week: Jim Cramer.
The Backstory
Musk’s issues started last August when he tweeted Tesla had “funding secured” to take Tesla private at a price of $420 per share. After the Securities and Exchange Commission investigated the claim, U.S. District Judge Alison Nathan approved a fraud settlement between Musk and the SEC than involved both Musk and Tesla paying $20 million in fines each and Musk stepping down as Tesla chairman for three years.
As part of the fraud settlement, Musk agreed to have any material tweets regarding Tesla approved by Tesla’s legal team. Following the settlement, Musk proceeded to take shots at the SEC on Twitter, calling the regulator the “Shortseller Enrichment Commission.” Musk later told “60 Minutes” he has “no respect for the SEC.”
In February, Musk got himself in hot water again for tweeting that Tesla would build 500,000 cars in 2019. He later clarified that message by tweeting that Tesla would end 2019 at an annual production rate of 500,000 cars, but would only produce 400,000 cars this year.
The SEC then sent a letter to Nathan asking her to hold Musk in contempt of court for violating the terms of the fraud settlement.
“Musk had not sought pre-approval for a single one of the numerous tweets about Tesla he published in the months since the court-ordered pre-approval policy went into effect,” the SEC alleges in its complaint. Musk disputes these claims and has argued that the tweets in question contain no material information about Tesla.
Musk Vs. Cramer
Cramer has been one of Musk's many targets dating all the way back to Tesla's IPO in 2010. After Cramer criticized Tesla's business plan, Musk responded in an on-air interview.
"Sure, Jim, we're no Bear Stearns, but I think we're going to do OK. Jim I think reccomended Bear Stearns and Lehman and other things, so frankly I think he's a contra-indicator" Musk said, referencing Cramer's infamous call that "Bear Sterns is fine" prior to the company's 2008 bankruptcy.
Cramer has been extremely vocal about Musk’s recent behavior.
Back in February, Cramer said going after the SEC is not a joke.
"If this guy is going to attack the SEC, how about removing him? He attacked the SEC," the CNBC host said.
On Tuesday, Cramer ripped Musk again.
“This judge either has to get rid of him or say that the SEC is wrong. But Musk has made a fool of Judge Nathan," Cramer said on CNBC.
The following day, Cramer said Judge Nathan has three choices of how to handle Musk:
- Appoint a “special master” to Tesla’s board to force Musk to comply with the terms of his fraud settlement.
- Remove Musk as CEO of Tesla.
- Charge Musk with a criminal violation of the settlement and sentence him to jail time.
“If the SEC's allegations are true, then he's basically spitting in the justice system's face ... [and Judge Nathan] can't just let him violate a court order and get away with it,” Cramer said.
Musk Fires Back
On Wednesday, Musk replied to one of Cramer’s Tesla discussions on Twitter, linking to a Wikipedia page describing how Cramer used to manipulate stock prices by short selling when he was managing a hedge fund. In the video, Cramer said everything he did at the time was legal, but illegal activity in the hedge fund industry is common as well.
Musk later added another tweet saying: "Jim can't take the heat."
Cramer responded to Musk via Twitter, saying "you go make cars, i'll go make show!!"
On Friday morning, Cramer added a more detailed response.
"Boss, we've both got a ton to do today. But you got a new lease on life from the judge. So bag your lawyers, say you apologize, get someone to handle your twitter account and then go back to being the great industrialist you are. Have a great one!" Cramer wrote in the tweet.
Critics Respond
Musk’s critics quickly pointed out the irony in him calling out Cramer for market manipulation given that the original fraud settlement was related to charges of alleged market manipulation by Musk.
“Jim Cramer, regardless of what I thought about him in the past, I thought he made very good points,” Chris Irons, better known as "Quoth The Raven," said on his podcast.
“I actually agree with Elon Musk in his assessment of Jim Cramer as a market manipulator ... but I think Musk is missing a lot of big points, which is nothing says market manipulation like faking a buyout offer for a $60-billion company.”
Regardless of whether or not they side with Musk in the drama, Tesla shareholders are having a rough go of it in 2019.
Tesla shares are down 19.5 percent year-to-date and were trading down 2.28 percent at $267.78 at the time of publication Friday.
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Photo by Steve Jurvetson/Wikimedia.
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