Tesla Inc. (TSLA) seems to be recovering fast from its Friday fall after the settlement with the SEC and changes in management. Tesla was up 16% in premarket hours on Monday, which would give the carmaker a valuation of about $52 billion. The stock had dropped 14% on Friday following the news of the SEC investigation.
Over the weekend, CEO Elon Musk agreed to a settlement with the SEC under which he would be allowed to continue as CEO but would have to step down from the chairman position. Tesla and Musk each have to pay a penalty of $20 million to the SEC, Musk needs to step down from the board and Tesla has to appoint two new independent directors and a chairman.
The SEC had initially wanted to remove Musk as CEO but the current settlement will come as a relief to those who believe Musk’s presence at Tesla and his vision is crucial for its success. Last month, Musk tweeted that he had secured funding to take Tesla private at $420 per share. This prompted the SEC investigation that claimed his statements were misleading.
Tesla’s shares have seen spikes and drops since then over Musk’s behavior which raised concerns on his ability to run the company. The stock had plunged about 30% since Musk had tweeted about taking Tesla private. The departure of a large number of executives in a short span of time added fuel to the fire. Although it was predicted that Tesla’s stock would dip on Monday, it has seen a rise.
A report by CNBC states that Musk has asked his staff to ignore the distractions while also hinting that achieving profitability was imminent. Tesla is expected to report third quarter production numbers this week, a factor which appears to be spreading optimism that is also giving the stock a lift.
Musk finally concedes defeat, will step down as Tesla Chairman