Elon Musk’s tweet wipes $14 billion off Tesla’s value

SAN FRANCISCO: The shares of carmaker Tesla tumbled dropped by nine percecent after Chief Executive Officer Elon Musk tweeted that the high-flying stock was overly expensive.

“Tesla stock price is too high,” Musk said on Twitter in one of several unusual messages, including ones quoting parts of the US national anthem and that he would sell almost all his physical possessions. The subsequent share drop wiped around $13 billion from Tesla’s market value and nearly $3 billion from the value of Musk’s stake.

Musk has a history of sending provocative tweets. In August 2018, he tweeted that he had secured funding to possibly take Tesla private at a big premium, which led a fraud case by the US Securities and Exchange Commission. Musk settled by agreeing to pay $20 million and have a Tesla lawyer pre-screen tweets with important information about the company.

Tesla stock price is too high imo

— Elon Musk (@elonmusk) May 1, 2020

I am selling almost all physical possessions. Will own no house.

— Elon Musk (@elonmusk) May 1, 2020

Last month, a federal judge said Tesla and Musk must face a lawsuit by shareholders over the going-private tweet, including a claim that Musk intended to defraud them.

Tesla’s stock has surged in recent weeks but have been down since Wednesday after the company reported an unexpected quarterly profit, despite manufacturing interruptions caused by the coronavirus pandemic.

Musk’s latest tweets follow others this week. On Tesla’s quarterly conference call earlier this week, he called sweeping US stay-at-home restrictions to curtail the coronavirus outbreak “fascist”. The restrictions have forced Tesla to stop its car plant in Fremont, California.

Musk’s stance has helped him attract over 33 million followers on Twitter and is seen as a marketing boon for Tesla. Tesla’s recent rally has put Musk on the verge of a payday of over $700 million.

The six-month average of Tesla’s market capitalization is just short of $100 billion, a target that would trigger the vesting of a tranche of options granted to Musk to buy 1.69 million shares as part of his two-year-old pay package.

Musk said the promise to sell his possessions included his house, formerly owned by actor and producer Gene Wilder, and bought in 2013. “One stipulation on sale,” he tweeted, “I own Gene Wilder’s old house. It cannot be torn down or lose any of its soul.”