Bumpy ride for investors after Tesla boss Elon Musk's U-turn

Elon Musk

Elon Musk

The high price investors have put on Tesla's shares has allowed Musk to expand United States production, invest in building out a vehicle charging network and start work on new models including a small sport utility vehicle, a new Roadster and a semi-truck even as the company burned cash.

U.S. securities law requires public company executives to have a "reasonable basis" on which to make representations to the investing public, and that would likely be the focus of an SEC probe, said three securities lawyers.

Well, turns out that deal was not exactly done, the funding far from secured.

With Musk's idea of a buyout backed by Saudi Arabia's sovereign wealth fund off the table, investors will focus on Tesla's efforts to become profitable, the company's cash reserves and what steps Musk could take to raise fresh capital. The Securities and Exchange Commission initiated an investigation to learn whether Musk had misled investors about the financing. In addition to its interest in Tesla, the Saudi sovereign wealth fund is considering an investment in aspiring USA electric-car maker, Lucid Motors Inc., one of the people said.

Other investors made their concerns widely known. Musk himself is the public face and voice of the company, and often communicates directly via Twitter, where he has more than 22 million followers.

Shares of Tesla slipped on the first day of trading after the electric vehicle maker said it won't consider going private after all. Was it the advice of equity firm Silver Lake, or investment juggernaut Goldman Sachs?

Facebook suspends Myanmar army chief's account after United Nations report on Rohingya genocide
Government spokesman Zaw Htay was not immediately available for comment. "The ethnic violence in Myanmar has been truly horrific". Facebook also said it had removed pages that the USA government had previously named as Russian military intelligence services.

It remains unclear what Musk meant by "funding secured".

The next measure of how Tesla bounces back may come in early October, when it will report third-quarter production and deliveries.

"Eventually this will blow over, but it's going to take at least six months", analyst Gene Munster of Loup Ventures said by phone Saturday. It's created a new layer of questions for investors.

The SEC investigation and investor lawsuits related to the whipsawing stock will at minimum continue to divert management's time from operations, Joel Levington, a senior credit analyst with Bloomberg Intelligence, said in a note Saturday.

Musk also indicated he was unaware how challenging the process would be and did not want to distract from the goal of ramping up production of the Model 3 sedan.

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