From $420 To $230: Where Tesla Stands One Year After Elon Musk's 'Funding Secured' Tweet

It’s been exactly one year since Tesla Inc TSLA CEO Elon Musk posted his “funding secured” tweet that sent Tesla’s share price soaring. At the time, the future seemed as bright as ever for Tesla and its investors.

One year later, shareholders would like to forget the now-infamous tweet and most of the bizarre year that followed.

Funding Not Secured

The tweet that started it all was posted at 12:48 p.m. on Aug. 7, 2018.

“Am considering taking Tesla private at $420. Funding secured,” Musk wrote.

Understandably, Tesla’s share price jumped 14% that day to an intraday high of $387 before closing at $379.

A week later, Musk provided an update on his mysterious funding, which he said in a blog post was coming from the Saudi Arabia sovereign wealth fund, a 5% owner of Tesla at the time. Musk said he left a meeting with Saudi representatives with “no question that a deal with the Saudi sovereign fund could be closed.”

On Aug. 15, the SEC sent subpoenas to Tesla for more information about Musk’s claims. On Sept. 27, the SEC filed a lawsuit against Musk accusing him of manipulating Tesla’s share price by making “false and misleading” claims in his “funding secured” tweet.

By that time, Tesla’s share price had sunk to $264, about 31.7% below its Aug. 7 peak.

SEC Settlement

After denying wrongdoing, Musk reached a settlement agreement with the SEC two days later in which Musk and Tesla were fined $20 million each and Musk would step down as Tesla chairman for at least three years. Soon thereafter, Tesla named Telstra CFO Robyn Denholm as its new chair.

On Oct. 4, Musk lashed out at the SEC, referring to it as the “Shortseller Enrichment Commission” on Twitter.

In a December interview with “60 Minutes,” Musk said: “Let me be clear: I do not respect the SEC.”

Also in December, Tesla added independent board members Larry Ellison and Kathleen Thompson-Wilson as part of Musk’s SEC settlement.

Musk once again got in trouble on Twitter on Feb. 19, 2019 when he tweeted that Tesla would “make around 500,000” vehicles in 2019 before quickly correcting himself and stating Tesla would be delivering “about 400k” vehicles.

The SEC was quick to ask the judge who oversaw Musk’s settlement to hold him in contempt of court for violating the terms of the settlement, since the production estimate tweets were not approved by Tesla. Musk once again denied any wrongdoing by claiming that the tweets were irrelevant to Tesla investors, an explanation the SEC said “borders on the ridiculous.”

See Also: 'Concerning Trend': Wall Street Weighs In On Tesla's Q2 Earnings

Tesla’s Struggles Continue

In March, CNBC reported that, in a third round of Tesla layoffs, the company cut down its workforce by 8% in an effort to reduce costs.

Tesla also announced it would be closing most of its physical retail stores and shifting its operations online. After stiff backlash, the company announced later in the month that it changed its mind and would only be closing about 10% of its stores.

On April 24, Tesla reported a first-quarter loss that was far below Wall Street expectations, and the stock fell below the $250 level.

Stock Bottoms Out

Tesla shares made new lows in May when the company announced a $2-billion stock and debt offering after telling investors throughout 2018 it was not in need of capital.

Tesla shares finally bottomed out in late May at $176 after Tesla’s vice president of internal engineering became the latest in a parade of executives to leave the company. The $176 bottom represented a 54.5% drop from the post-"funding secured" high.

Tesla shares bounced when the company reported record second-quarter deliveries in-line with its guidance, but dropped once again when second-quarter losses came in larger than anticipated.

Happy Anniversary?

Perhaps it's appropriate that Tesla marks the anniversary of Musk’s bizarre “funding secured” tweet with some more controversy. On Wednesday, documents posted on the website PlainSite said the U.S. National Highway Traffic Safety Administration filed a cease-and-desist order against Tesla back in October for making “misleading statements,” including claims that the Model 3 has “the lowest probability of injury of all cars the safety agency has ever tested.”

Consumer Reports has also had multiple run-ins with Tesla, choosing not to recommend the Model 3 due to quality and safety concerns.

Now that all the dust has settled on Tesla’s crazy year, the stock is trading around $230 per share at time of publication, down 40.9% overall in the past year. In that same stretch, the SPDR S&P 500 ETF Trust SPY is up 0.4%.

For perspective, shares of Ford Motor Company F are down 5.6% in that time, while shares of General Motors Company GM are up 4% in the past year.

Photo by Steve Jurvetson via Wikimedia.

Posted In: Consumer ReportsElon MuskNHTSATop StoriesSECMoversTrading Ideas