In its latest quarter’s filing with the Securities and Exchange Commission (SEC), electric vehicle (EV) maker Tesla (NASDAQ:TSLA) disclosed that federal regulators, including the U.S. Department of Justice (DOJ), have issued subpoenas and requested information regarding “personal benefits, related parties, vehicle range and personnel decisions.”
Tesla Under Pressure
Tesla’s disclosure about subpoenas related to personal benefits confirms a report in August by the Wall Street Journal that federal prosecutors are investigating the use of company funds to build CEO Elon Musk’s spacious glass home, a project internally called “Project 42.” Regulators have also sought details about transactions between Tesla and Musk’s other entities.
Tesla’s disclosure also confirms the Wall Street Journal’s September report on regulators seeking information about the driving range of the company’s EVs.
Further, in its quarterly filing, Tesla reiterated its statement about receiving requests for information from the DOJ about the company’s Autopilot and Full-Self Driving (FSD) features. Federal prosecutors are investigating whether the company misled consumers and investors by making false claims about its Autopilot feature. The National Highway Traffic Safety Administration has been conducting an investigation for more than two years about the performance of Autopilot following a dozen crashes involving Tesla EVs.
Meanwhile, Tesla also revealed that its 2023 capital expenditure would exceed its targeted range of $7 billion to $9 billion, as the company is ramping up production at its factories and preparing to launch new models.
Overall, Tesla seems to be under pressure due to its underwhelming third-quarter performance, persistent macro pressures, rising competition, delays in its Cybertruck launch, and ongoing regulatory investigations.
Is Tesla a Buy, Sell, or Hold?
Wall Street is cautiously optimistic about Tesla due to multiple near-term headwinds. The Moderate Buy consensus rating on TSLA stock is based on 14 Buys, 14 Holds, and five Sells. The average price target of $253.18 implies 19.4% upside potential. Shares have declined more than 16% over the past five days but are still up 72% year-to-date.
