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The U.S. Securities and Exchange Commission said in a lawsuit
that Musk had made a series of false and misleading statements
and caused volatility in the company's shares with tweets last
month which raised the potential of taking Tesla private before
swiftly withdrawing the idea.
Musk, 47, is the public face of Tesla and J.P. Morgan analyst
Ryan Brinkman questioned how easy it would be for the
$50-billion manufacturer, which is still losing money, to raise
funds at affordable rates without him.
GRAPHIC: Tesla stock timeline - https://tmsnrt.rs/2IkPQ8S
"We are concerned that decreased confidence in Tesla on the part
of investors may impact the company's ability to raise capital
on amenable terms," Brinkman said.
Four early research notes from Wall Street analysts and
brokerages all said that Musk might have to resign.
The Silicon Valley billionaire said overnight he had done
nothing wrong and Tesla's board reiterated its support for him.
"The SEC civil action may lead to Musk's exit from Tesla (either
permanently or temporarily) and the Musk premium in the shares
dissipating," Barclays analyst Brian Johnson said.
Shares were last down 10.8 pct at $274.17 in trading before the
bell in New York, which would wipe about $6 billion off Tesla's
market value.
Gene Munster, managing partner at venture capital firm Loup
Ventures, said the lawsuit adds further distraction at a
critical 6-month juncture in the company's viability.
"Despite this, we think the company will survive," he said.
The SEC's lawsuit, filed in Manhattan federal court, caps a
tumultuous two months set in motion on Aug. 7 when Musk told his
more than 22 million Twitter followers that he might take Tesla
private at $420 per share, with "funding secured".
The regulator charged that Musk "knew or was reckless in not
knowing" that his tweets were false and misleading.
Jeffrey Osborne, an analyst at brokerage Cowen, said investing
in Tesla equity and bonds over the past few weeks had been "a
game of choose your own adventure".
"The ball is in the Board's court now and it remains to be seen
what will happen next," he said.
(Reporting by Munsif Vengattil in Bengaluru; editing by Patrick
Graham)
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