Elon Musk. Tesla and the SEC Charges. Fraud or Unjustified Rush to Judgment?

Elon Musk, Tesla Factory, Fremont (CA, USA) in 2011. Photo by: Maurizio Pesce. Wiki Commons License. Used with permission.

I'm sure you've seen the news that the Securities and Exchange Commission has charged Elon Musk with fraud & wants to bar him from serving as an officer or a director of any publicly held company, including Tesla.
 
Elon Musk is calling the action "unjustified," according to TechCrunch.

The independent directors of Tesla's board issued a letter of support last month, before the SEC's action.
 
My blog from September 16, 2018 includes key updates on Tesla to factor in the mix, particularly if you are an investor, or are tempted to purchase Tesla shares at the new discounted price (which could conceivably go lower). That blog includes an update on Tesla’s safety ranking, sales ranking, predictions for the 3rd quarter earnings report (due the first week of November), tax credits, other Tesla products and more. 

One big consideration that most people are not factoring in is that the SEC charges are not an all or nothing proposition. If Tesla investors and Tesla's Board Of Directors want to keep Elon Musk, and the SEC persists in their charges, Tesla can go private. The SEC can't bar him from running the company then. Since this plan was already on the table, it’s still top of mind. If the 3rd quarter earnings report is as outstanding as forecasts predict, then it is hard to imagine that Tesla investors will want Musk ousted. Of course, there are a lot of ifs in that sentence. The situation will certainly become more clear between now and early November.
 
Two things that are sure already, however, are that the Tesla cars are scoring the highest safety ratings ever issued by the National Highway Traffic Safety Administration, and the Tesla 3 just became the bestselling car (by revenue, in August). There are a lot of problems and issues with the other car companies, which never make headlines. General Motors lost almost $4 billion last year, and has lower revenue this year. Ford sales are lower year over year as well. Both GM and Ford have eyepopping exposure to pension and other post employment benefit obligations, in addition to massive debt. Ford’s pensions and OPEBs are underfunded by $13 billion, while GM’s underfunding status is $20.5 billion (at the end of 2017). Tesla benefits from being a newer company, at a time when self-directed 401ks are de rigueur. Pension problems at legacy companies haven't made many headlines.

There are a lot of noise, false information and soapbox pundits out there, offering some ill-informed misinformation. This blog, and my blog from Sept. 26, 2018, offer a more complete picture, so that you can make your own judgments.
 
Finally, Tesla's stock is down, but it's not "crashing." In fact for news like this, the stock has held up pretty well. Tesla shares were trading for $307 yesterday and closed at $265 today. Since April of 2018, Tesla shares have been fluctuating between $250/share and $385/share, rising and falling on headlines.
 
Tesla is making the safest cars on the road and the company is growing revenue at a pace of 43% year over year, simply squashing the competition in growth. Learning how to do a Stock Report Card and ask the Four Questions to evaluate your investments can reveal most of the pieces of the 100-piece puzzle that is investing in individual companies. For those of you who have attended my retreats or read my books, what you are experiencing today with Tesla is exactly why it is so hard to “buy low and sell high.” Today, Tesla’s stock is 13% cheaper than it was yesterday. However, everyone thinks it’s crashing. The temptation is to sell low, rather than to buy low. It is the sober analyst who is forecasting possible scenarios, based upon the facts, and coming up with a rational plan that includes buying Tesla stock on sale (or perhaps selling it, even at a loss, if the company is headed into the toilet).
 
We’ll see if the SEC’s rush to judgment stands up, whether the parties settle this empasse or whether Tesla will be forced to go private to protect its visionary chairman and CEO. I’ll be sure to include an update in my October teleconference on Oct. 11, 2018. Be sure to join me. (It’s free.) Click on the link to access the show page, call-in and listen back information.
 
We spend a full day at my Investor Educational Retreats evaluating individual companies, to determine what’s hot and what’s a bailout, which you can use to inform all of your investments and your nest egg strategies. Call 310-430-2397 to learn more and to join me in Arizona mid-October or Santa Monica for Valentine’s Day 2019. Register for the Santa Monica Retreat by Sunday, September 30, 2018 to receive the best price, and while there are still a few seats available. 

​Other Blogs of Interest
Should You Buy Tesla Stock?

Has Elon Musk Lost It?

Russia is Dumping U.S. Treasuries and Buying Gold Instead.

Are Electric Cars Safe? from May 20, 2018

Odds of an Interest Rate Hike are Above 90%.

5 Harbingers of Recessions

How a Strong GDP Report Can Go Wrong.
 
Unaffordability: The Unspoken Housing Crisis in America
 
Social Security and Medicare Warn of Depletion.

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​Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations. ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable however NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.
 
Full Disclosure: I own shares of Tesla.