SEC Revisits 2018 Tesla Settlement After Elon Musk’s Tweet

The SEC has subpoenaed Tesla (TSLA) for information related to the 2018 settlement between the regulator and the electric automaker, according to Tesla’s regulatory filing. Tesla stock fell 1.73% on Monday to close at $907.34. The stock has declined about 24% year-to-date.

In 2018, Tesla CEO Elon Musk tweeted about a plan to take the company private for $420 a share, saying he had even secured funding for it. But the SEC took issue with that post and went on to sue Musk and Tesla over it.

A settlement was reached that imposed certain requirements on Tesla. For example, Musk had to step down as Tesla’s chairman while retaining the CEO post. Additionally, Tesla’s lawyers needed to review and approve Musk’s social media posts that contain material information about the company.

SEC Subpoena

Tesla reveals in the filing that the latest SEC subpoena, which it received on November 16, 2021, sought information about its compliance with the 2018 settlement. Notably, the SEC issued the latest subpoena only 10 days after Musk tweeted about a plan to sell a large chunk of his Tesla shares to cover taxes. In that post, Musk sought the opinion of his Twitter followers about selling 10% of his Tesla stake for tax purposes since he does not receive a cash salary.

Bitcoin Holdings

In addition to revealing the SEC subpoena in connection to the 2018 settlement, Tesla’s filing also discusses the company’s Bitcoin investment. In 2021, the company purchased $1.5 billion worth of Bitcoin and later sold 10% of its holding. The filing shows that as of the end of 2021, Tesla’s remaining Bitcoin holding was worth $1.99 billion.

Analysts’ Take

Daiwa Securities analyst Jairam Nathan recently reiterated a Hold rating on Tesla stock but lowered the price target to $980 from $1,150. Nathan’s reduced price target suggests 8.01% upside potential.

Consensus among analysts is a Moderate Buy based on 17 Buys, 7 Holds, and 6 Sells. The average Tesla price target of $1,112.78 implies 22.64% upside potential to current levels.

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