Tesla is now facing a lawsuit after an investor, Chase Charity in Delaware, sued Elon Musk and the Tesla board for some of Musk's comments on Twitter. The tweets allegedly violated a settlement with the Securities and Exchange Commission meant to temper his communications.
The lawsuit stated that Musk's tweets have cost the electric-vehicle company "billions of dollars in market capitalization". They also claim to have breached the agreements with the SEC.
The SEC charged Musk with securities fraud back in 2018 after a tweet saying he would take Tesla private if the stock price hit $420. The parties did come to a settlement at that time, which forced Musk to step down as the company's chairman. Afterwards, Tesla was required to put procedures in place to oversee Musk's communications relevant to Tesla shareholders.
Musk's social media presence has shown influence on everyday investors. In a recent study done on investors, about one-third of respondents said they made personal investments based on the CEO's tweets. The new lawsuit, originally filed on 8 March, alleges that the billionaire's tweets since 2018 violate that agreement. They also accused the board of failing to keep Musk's comments in check.
One of Musk's tweets cost Tesla stock prices to drop almost 10% within hours after Musk tweeted in May, "Tesla stock is too high imo."
The lawsuit states: "The Valuation Tweet was only one in a series of erratic tweets on this date from the same Twitter account. Musk's wrongful conduct has caused, and will continue to cause, substantial harm to Tesla."