Tesla (TSLA) stock plunges on SEC reportedly saying Elon Musk is violating their deal over tweet

Tesla (TSLA) stock is taking a 5% plunge in aftermarket trading after the SEC is reportedly asking a judge to hold CEO Elon Musk in contempt for violating their settlement deal over tweets.

In October, a judge approved the settlement of SEC’s complaint against Musk over his “funding secured” comment about his attempt to take Tesla private.

One of the terms of the settlement is that Tesla’s board would have to get more oversight of Musk’s tweeting, which would need to be restrained when it comes to statements that could move Tesla’s stock.

Tesla confirmed last year that they were working on the new policy to be in place by the new year:

“We can confirm the settlement is being complied with. This includes having a policy (which technically needs to be in place by December 28) that requires pre-approval of any communications that reasonably could contain material information.”

Now, Bloomberg reports on Terminal that SEC is asking a judge to hold Musk in contempt for violating the term of the settlement deal over tweets he made last week.

Musk tweeted last week that Tesla will make 500,000 cars in 2019:

Meant to say annualized production rate at end of 2019 probably around 500k, ie 10k cars/week. Deliveries for year still estimated to be about 400k.

— Elon Musk (@elonmusk) February 20, 2019

He quickly corrected the tweet saying that 500,000 cars will be the annual production rate at the end of the year.

The CEO also acknowledged that Tesla also produced a few Roadsters in 2011 and not “0 cars.”

It appears that the SEC took issue with the original tweet.

Last year, Musk said that he has “no respect” for the SEC and he alluded on several occasions that he believes the agency is working to help the shorts betting against Tesla.

We contacted out Tesla about the situation and we will update if the company decides to comment.

Electrek’s Take

Is this serious? Can anyone honestly look at this as an attempt to manipulate Tesla’s stock?

If anything, he clearly misspoke (or misstweet) and corrected it quickly. We are going through the court over someone making a small mistake on Twitter now?

The stock actually moved more from this news of the SEC seeking to hold Elon in contempt than from the actual tweet that they are apparently worried about moving the stock.

I think the SEC looks ridiculous here.