Federal prosecutors are expanding their investigation into the personal benefits that Tesla (NASDAQ:TSLA) may have extended to its CEO Elon Musk since 2017, a Wall Street Journal report highlighted. The move is part of the Department of Justice (DOJ) and the U.S. Securities and Exchange Commission’s (SEC) investigation encompassing the proposed housing arrangement for Musk using company funds.
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The report underscored the extension of the investigation’s timeframe to 2017, which now spans beyond what was initially known.
Federal prosecutors are also seeking information about transactions between the EV company and Musk’s other entities. Additionally, new information indicates that the scope of the probe by federal prosecutors has broadened and that they are pursuing potential criminal charges.
One of the key aspects of the extension of the scrutiny is to unearth whether Tesla has appropriately reported any benefits that Musk may have received.
While the outcome of the investigation is uncertain, Goldman Sachs analyst Mark Delaney sees pressure on Tesla’s bottom line and lowered his earnings estimates. The analyst reiterated a Hold recommendation on TSLA stock on September 17 and expects the ongoing price cuts to offset cost reduction benefits to its bottom line. As Tesla’s margins are under pressure, let’s look at what the future holds for its shareholders.
What is the Prediction for Tesla?
Tesla is focusing on maintaining its leadership in the EV (electric vehicle) space by driving volume growth and reducing the cost of manufacturing. Moreover, the company’s profitability is expected to get a boost from the acceleration of software-related gains over time.
However, the pressure on its margins could remain a short-term drag, keeping Wall Street analysts sidelined. With 11 Buys, 12 Holds, and five Sell recommendations, Tesla stock has a Hold consensus rating. Meanwhile, analysts’ average price target of $270.80 is marginally higher than its closing price of $266.50 on September 19.
