Tesla (TSLA) stock falls on report of alleged Department of Justice criminal probe

Discussion in 'In the News' started by simonalvarez0987, Sep 18, 2018.

  1. simonalvarez0987

    simonalvarez0987 Active Member

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    #1 simonalvarez0987, Sep 18, 2018
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    Shares of Tesla (NASDAQ:TSLA) fell by more than 5% in midday trading Tuesday following a report that the Silicon Valley electric carmaker is under investigation by the US Justice Department over statements made by company CEO Elon Musk last month pertaining to the company’s possible privatization and the fact that funding had been “secured.”

    News of the Justice Department’s investigation was related to Bloomberg News by two individuals familiar with the matter. The criminal investigation will reportedly run alongside a previously reported civil inquiry by the Securities and Exchange Commission (SEC). The criminal investigation is reportedly in its early stages. 

    Federal prosecutors reportedly opened the fraud investigation due to Elon Musk’s now-infamous “funding secured” tweet last August 9, which resulted in TSLA stock soaring 11% to $387.46, according to the publication’s sources. Inasmuch as the announcement pushed the company’s stock near its all-time highs on the day of Musk’s tweet, TSLA stock began a long trek down as questions emerged about the source of funding the CEO was referring to in his tweet.

    Few details are currently known about the ongoing investigation. That being said, Justice Department probes like the civil inquiries being undertaken by the SEC, are known to take months to complete, with investigations at times ending with prosecutors deciding to take no enforcement action.

    A few days after announcing that he is thinking of taking Tesla private, Elon Musk published a blog post stating that the “funding secured” tweet came from talks he has had with Saudi Arabia’s sovereign wealth fund, which took a 5% stake in Tesla earlier this year. The weeks following these announcements were incredibly volatile, as SEC investigations were reportedly begun, lawsuits were filed, and TSLA shares took a dive.

    Tesla, for its part, began the process for its possible privatization. Musk hired several high-profile advisers including bankers from Goldman Sachs, as well as attorneys from Wachtell, Lipton, Rosen & Katz. He also hired Silver Lake Partners’ Egon Durban, who brokered and helped bankroll the buyout of Dell when it went private. By August 22, Tesla’s advisers had a list of possible investors that would provide funding for the company’s privatization at $420 per share.

    Among the investors that were willing to fund Elon Musk’s go-private initiative were German auto giant Volkswagen AG, as well as Silver Lake Partners itself. Together, the investors reportedly agreed to contribute as much as $30 billion for the deal. At this point, though, Elon Musk already had reservations, particularly since it would be incredibly difficult to bring over TSLA’s retail investors into a privatized Tesla.

    Ultimately, Elon Musk opted to walk out of a possible $30 billion deal. An announcement about the company staying public was posted on Tesla’s official blog soon after. Since then, Tesla has focused itself on its original Q3 2018 targets - that is, the continued production ramp of the Model 3 and the company’s aim to become profitable. The company appears poised towards a record quarter, particularly after Elon Musk noted in a letter to employees that Tesla is “about to have the most amazing quarter in (its) history, building and delivering more than twice as many cars as (it) did last quarter.”

    Following is Tesla’s official response to the reported DOJ investigation.

    “Last month, following Elon’s announcement that he was considering taking the company private, Tesla received a voluntary request for documents from the DOJ and has been cooperative in responding to it. We have not received a subpoena, a request for testimony, or any other formal process. We respect the DOJ’s desire to get information about this and believe that the matter should be quickly resolved as they review the information they have received.”

    As of writing, Tesla stock is trading down 2.22% at $288.27 per share.

    This story is currently developing.

    Article: Tesla (TSLA) stock falls on report of alleged Department of Justice criminal probe
     
  2. Roy_H

    Roy_H Member

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    Wouldn't Elon or his friends have to bought a large number of stocks before the announcement and sold after on the rise in order to have committed a fraud? If there was no profit taking on the rise then what is the damage to other investors? Most investors would be happy to see it rise and shorts not. But that is an almost daily issue on volatile stocks anyway.
     
  3. mail2larryh

    mail2larryh Member

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    The real manipulation here is using this fake premise to do more harm to Tesla Stock but who is going to investigate the DOJ? Our entire justice system has been proven to have been involved in corrupt activities with regard to election tampering. They are peaking from behind the justice blindfold to pick winners and losers everywhere they can benefit from it. Elon Musk should sue because for most of the past decade, the DOJ, FBI and most of the other alphabet soup has been so deeply corrupted they aren't fit to investigate a Kool Aid stand robbery.
     
  4. JCJ007

    JCJ007 New Member

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    This is worrying and I'd view this as the beginning of what is to come. Elon Musk is a gambler albeit a very clever one he has gambled on disrupting the market, he has forward sold the roadsters based on technology that doesn't exist yet, he has gambled on the cheaper Model 3 and taking that market by storm yet the sedan market is contracting while the SUV market in all sizes is expanding. He is spinning a lot of plates Government money is involved hence the involvement of the DOJ his gambles may pay off but the exodus of executives is weird for a company in good health and attempting to take the company private smacks of trying to hide something. Not that he is of course as he is a litigious Billionaire. Tesla is in Flux what they are doing with power generation is great and has a bright future what they are doing with cars is not working out. Get your popcorn its going to be exciting its certainly a stock to watch.
     
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  5. cygnusexwon

    cygnusexwon New Member

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    When someone disrupts as Musk has with Tesla, SpaceX, Boring, Starlink, Neuralink (and whatever else he has up his sleeve) you can rest assured that there will be big time backlash. Any entity that stands to lose from his success will resist change with all the weapons it has in its arsenal. So wether it’s a tweet or a pod cast or a fart in your general direction Musk will catch shit for it.
    They are going to the mattresses’.

    It’s truly a shame that a person, by all indications, is working so diligently to help humanity as a whole has so many battles to fight above and beyond just making it happen.
     
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  6. JCJ007

    JCJ007 New Member

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    Poor Elon working so hard for humanity? Really you guys would seek for beatification for Elon Musk. I find your unfailing loyalty to him sweet but the worship and he can do no wrong thing is a bit weird.
     
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  7. cygnusexwon

    cygnusexwon New Member

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    Of corse he does wrong, who doesn't. Failing is part of learning.
     
  8. Michael Russo

    Michael Russo Moderator

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    Funny, and I plead guilty to finding your seemingly recurrent opposition and lack of enthusiasm equally as odd... ;)
     

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