Imagine If Elon Musk Stopped Tweeting. Crazy, Huh?
(Bloomberg Opinion) -- It feels like every column about Elon Musk and Tesla Inc. should now be headlined: “Why not just make cars?”
The CEO of the $52 billion electric-vehicle phenomenon is, once again, courting trouble with the law about his tweets. Just typing that sentence feels slightly ridiculous. On Monday evening, the Securities and Exchange Commission asked a judge to find Musk in contempt for violating the settlement struck in October after he and the company were sued for his misleading “funding secured” tweet in August. Following that debacle, Musk was supposed to seek pre-approval internally of any communications of material information relating to the company. The SEC claims Musk breached that with his tweet from last week saying Tesla would produce around 500,000 vehicles in 2019, which he walked back somewhat a few hours later in a subsequent tweet.
Musk took issue with the SEC later on Monday evening… on Twitter. While Musk’s tweet about 500,000 deliveries did contradict guidance given in the company’s fourth-quarter results announcement (as noted in the complaint), the CEO pointed out that he had mentioned a figure of 500,000 on the subsequent earnings call. Tactfully, of course:
Let’s just brush over the fact that this didn’t match the projections in the results announcement. It’s harder to brush over the fact that his tweet wasn’t pre-approved. It’s also harder to brush over the fact that, on spotting the tweet, an internal lawyer contacted Musk and then helped draft the corrective one that went out later – and which, presumably, wouldn’t have been necessary if there was no problem, right?
One way to approach this circus is to imagine the opposite situation. Imagine if Musk hadn’t dangled a barely sketched idea about a take-private deal in front of investors last summer. Imagine if he hadn’t picked a fight with a spelunker who criticized his mini-submarine idea to rescue some children in a cave in Thailand. Imagine if, having been forced to settle with the SEC, he decided to lay off the Twitter habit just to be on the safe side. As the song says, it’s easy if you try. Because, really, not doing all these things is easy; it requires less time and effort than doing them. Time and effort that could go on – work with me – making cars and such.
As it is, Musk exposed himself and his company to legal risk last summer; then got off quite lightly; and now has placed himself and his company potentially in harm’s way again. The SEC placed the latest complaint in the context of Musk’s studied indifference toward the settlement, quoting him saying “I do not respect the SEC” in a TV interview in December (I know, it reads like bad fiction). Whether or not that ends up being ruled contempt in the legal sense, it certainly counts as such in everyday usage. It’s unclear what the judge will do (if anything), but more fines or even being barred from serving as a corporate officer could be on the table. While the SEC may have been reluctant to try to remove a CEO so central to the valuation of a large company like Tesla, courts are not by nature predictable places. And this latest move suggests the SEC is losing patience.
Regardless of the outcome of the current episode, it’s the saga as a whole that matters. Last week, I wrote about the dissonance between Tesla’s perceived strengths and valuation and the company’s spending plans and string of retirements and resignations. The latest of those was Dane Butswinkas, the general counsel of all of two months whose exit was announced abruptly last Wednesday – which just happened to also be the day the SEC asked Musk and Tesla if he had complied with the terms of his settlement when sending those tweets. Besides the departures, the board is a study in absence, albeit of a curiously inverse kind, where its impact remains mysterious despite the fact that its ranks have swelled rather than diminished.
In theory, the lawyers, the board and, y’know, the CEO himself should be busy expanding production and reassuring regulators and investors. Instead, we spent Monday evening debating whether Musk will or won’t be punished for tweeting something he didn’t have to tweet. That right there is the problem.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.
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