We would expect a technical genius and social media savvy person like Elon Musk to avoid trouble when posting about Tesla, but that’s not the case. Musk has been in trouble several times for his social media posts about the company, his thoughts on what should be done, and how he is investing his money. Most recently, the company received a subpoena from the U.S. securities regulator regarding his tweets. This is just the latest in a long line of troubles facing the CEO and the company.
Let’s Go Back to November
The subpoena issued by the U.S. Securities and Exchange Commission (SEC) was issued on November 16, 2021. This was ten days after Elon Musk asked his Twitter followers if he should sell up to ten percent of his stake in Tesla. This was careless and reckless on the part of Musk; who knows better than to ask such a question. This question alone triggered a stock selloff of the company, which wouldn’t have happened if not asked. Its actions like this make us wonder if there are times when Elon Musk forgets that he is the CEO of the company. The stock price fell hard because of the Tweet, which shares down 1.4 percent, and the price per share dropped to $909.98 when the market opened on February 7, 2022. The overall drop was nearly a quarter of the value of the stocks. Can all of this downfall be blamed on one tweet?
Elon Musk Violates Settlement Terms
As mentioned, the tweet posted in November wasn’t the first time Elon Musk has been in trouble with the SEC over his social media posts. In 2018, he settled a lawsuit filed by the SEC after posting his desire to take the company private. Since then, all tweets by Musk are supposed to be pre-approved by company lawyers, but there seems to be some disconnect in that aspect. Either the lawyers did not see the November tweet before it went out, or they approved it and allowed it to be released. Either way, the downfall was significant. A December Twitter poll by Musk regarding sock sales that pulled the company share price down violated the 2018 settlement agreement. We could chalk this up to ignorance if this were the first violation of the settlement, but it isn’t.
More Allegations and Lawsuits Filed
Tesla is constantly the ire of the automotive industry and safety regulators. Some might admire the brash nature of Elon Musk to push forward with technology and pick up the pieces of the fallout when they happen, but others certainly do not. This company and its CEO have been in the public eye for negative reasons many times, but somehow, the company continues to thrive.
Fire Risks Weren’t Properly Disclosed
The SEC opened an investigation only a year ago regarding the fire risks associated with the solar panel systems of Tesla vehicles. This is an investigation into a whistleblower complaint regarding the defect and the fact the company did not properly notify shareholders and the public of the risks involved.
Civil Lawsuits are Filed
Allegations of race discrimination and harassment at Tesla have become public news as well. The California Department of Fair Employment and Housing investigated the company based on complaints filed. This agency gave notice that it had grounds to file a civil lawsuit and is awaiting a response. This would not be the first lawsuit of this type that has been filed or settled against the company. In October, a federal jury ordered Tesla to pay $137 million to a former contract worker in one of the civil cases of racial abuse and sexual harassment. In an effort to move away from some of these troubles, the New York State Common Retirement Fund filed a shareholder proposal with Tesla and two other companies requesting reports on their efforts to prevent harassment and discrimination in the workplace. Proper action could lead to fewer lawsuits and less money being paid in settlements, but if the company as a whole follows the lead of its CEO, those efforts will likely be short-lived.
Tension with the Wrong Person
As the head of the biggest electric car company in the country, it makes sense for Elon Musk to have a strong positive relationship with the President of the United States. Unfortunately, that is not the case. While President Biden has loudly supported electric vehicles and has a plan to replace the entire government fleet with EV models, Tesla is not part of his plan. Instead of including Tesla in his plans, the Biden administration is focused more on legacy automakers such as Ford and GM. There’s no denying the expertise that Tesla could bring to the mix, but some issues continue to keep Elon Musk and his company from being invited as partners with other automakers under the President’s plan.
No UAW for Tesla
Not only has Elon Musk publicly, on Twitter, of course, showing his distaste for the UAW, but he also chose to stoop low in calling Biden a “damp sock puppet” in a tweet only a month ago. Using his Twitter account to attack the President isn’t going to win him an invite to the government initiative, and neither is his ire for the UAW. In a tweet he later was ordered to delete, Musk stated any Tesla workers that voted to join the UAW would lose stock options in the company.
Can Tesla Survive the Ticking Bomb
It might sound a bit unfair to call Elon Musk a Ticking Bomb, but based on his track record, it seems something is going to blow up in his face very soon. Musk is certainly a leader in technology, industrial growth, and space exploration, but not in labor relations or people skills. For the sale of Tesla and its shareholders, we can only hope that the worst wave is over. Tesla needs a few months or years without scandal, SEC complaints, or lawsuit costs.
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