Elon Musk Tweet Erases $14bn From Tesla’s Market Value
Musk’s latest series of bizarre tweets criticises California’s coronavirus lockdown and says Tesla’s shares are ‘too high’, causing them to plummet
Tesla’s shares dropped sharply on Friday after chief executive Elon Musk said on Twitter that their price was “too high”.
The message was part of a series of bizarre tweets that included calls for an end to the coronavirus lockdown and lines from the US national anthem, the “Star Spangled Banner”.
In the same series of messages Musk also said he would sell “almost all physical possessions” and would “own no house”.
The messages had some scrambling to find out whether Musk’s Twitter account had been hacked, but they are broadly in line with what the entrepreneur’s more than 33 million followers have come to expect.
Volatility
In April 2019 Musk tweeted, “My Twitter is pretty much complete nonsense at this point.”
Investors took Musk’s messages to heart, leading to a sell-off that saw Tesla shares dive by more than 12 percent in mid-day trading on Friday, knocking $14 billion (£11bn) off the company’s market capitalisation and $3bn off Musk’s own stake in the company.
Tesla’s shares were about 10 percent down at the end of the day’s trading.
The Wall Street Journal said it had asked Musk whether he was joking about Tesla’s share price and whether his comments had been vetted by Tesla’s legal department, receiving the reply, “No.”
Tesla’s shares had more than doubled in price from a pandemic-inspired low of $350.51 on 18 March.
Even including their drop, the shares remained up more than 40 percent from 1 May, 2019.
Tesla’s market value has risen this year to close to $100bn, a milestone that would trigger a bonus payment of hundreds of millions of dollars to Musk.
Last week Tesla reported an unexpected quarterly profit, in spite of manufacturing interruptions caused by the pandemic.
“Tesla stock price is too high IMO,” Musk tweeted, followed by “Now give people back their FREEDOM”, apparently a criticism of California’s shelter-in-place order during the Covid-19 pandemic.
California lockdown
During last Wednesday’s earnings call, Musk harshly criticised the state’s coronavirus measures, calling them “fascist”.
The lockdown has forced Tesla to temporarily shutter its Fremont, California plant.
Musk then tweeted several lines from the “Star Spangled Banner”, before returning to the theme of his planned house sale, writing: “I own Gene Wilder’s old house. It cannot be torn down or lose any (of) its soul.”
The Tesla chief executive’s Twitter posts have caused share volatility in the past, notably in 2018 when Musk tweeted about a now-shelved plan to take Tesla private.
Following a shareholder outcry Musk agreed with the SEC that he would submit Tesla-related statements to the company’s legal counsel before posting them on Twitter.
Musk’s erratic tweets are largely seen as a marketing bonus for the electric car maker.
Wedbush Securities analyst Daniel Ives told the Reuters news agency that his firm views Musk’s comments as “tongue in cheek” and “Elon being Elon”, although he acknowledged Musk’s tweets can be a “headache for investors”.
