The lesson from Elon Musk’s ‘funding secured’ mess is to never tweet

Never tweet. It’s a simple rule that you, me, and everyone who uses the hellish but seemingly indispensable social media platform should follow — if …

Never tweet. It’s a simple rule that you, me, and everyone who uses the hellish but seemingly indispensable social media platform should follow — if not exactly by the letter, then certainly in spirit. And there’s perhaps no greater example of that truism than the tweet sent one year ago today by Tesla CEO Elon Musk.

“Am considering taking Tesla private at $420,” he tweeted on August 7th, 2018. “Funding secured.” Those few words — the last two specifically — created an entirely new fire for Musk to put out at a time when he was already mired in the self-described “hell” of Model 3 production. He did not, as it turned out, have any funding secured to do such a thing.

Am considering taking Tesla private at $420. Funding secured.

— Elon Musk (@elonmusk) August 7, 2018

Without rehashing the entire experience, which we documented in detailoverthelastyear, here are some of the direct consequences of that decision to answer Twitter’s eternal prompt of “What’s Happening?”

  • Forced out as Tesla chairman.
  • Paid a $20 million fine.
  • Tesla paid a $20 million fine.
  • Musk bought $20 million in Tesla stock to essentially make up for the fine.
  • Appointed two new independent directors to the company’s board.
  • Agreed to have his tweets reviewed by Tesla’s in-house counsel.

That last point is especially relevant because, in February, the SEC tried to hold Musk in contempt for violating that part of the settlement. This kicked off another stage of the battle, one that very publicly played out in court over the course of a few months. In the end, the two sides agreed to amend the settlement to be more specific about what Musk can and can’t tweet without approval — language he might have just violated again.

In this modern age, bad tweets abound. They’re met with ratios or reported to Twitter itself, and are often, ultimately, deleted. You don’t usually see such concrete evidence of how bad a tweet can break, though. Millions of dollars, months of headaches and distractions, and a proverbial door that the money cops can walk through every time they think Musk might have tweeted something that harms his company’s shareholders.

To be fair (I guess?) to Musk, these are the kinds of consequences he was trying to avoid by taking the company private! And for what it’s worth, the fact that he didn’t have “funding secured” from Saudi Arabia meant he ultimately avoided what certainly would have been immense scrutiny from… well, everyone, following the killing of Washington Post journalist Jamal Khashoggi. (Saudi Arabia does still own about 5 percent of Tesla’s stock that it bought on public markets, though it hedged that position earlier this year.) But if you’re going to announce that you have lined up Saudi Arabian cash to take your multibillion-dollar company private in the middle of the trading day, you should probably resist the siren song of tweeting, put down the phone, and wait until that money actually exists.

Which brings me back to my original point: “never tweet.” Again, I believe fully in the spirit of this rule as opposed to the letter of it, and often use it as a mantra to back myself off of any Twitter ledge I find myself on. I still tweet (sometimes a lot!). But more often than not, I think of the proverbial bullet Musk took, and do a survey of the resulting damage, tap “Cancel” and then “Delete.” As much as I love Twitter, we’d all probably be better off putting a bit of distance between it and our synapses anyway. Or, at the very least, burying it in our drafts while we cool off. We all might not have the fate of a massive company riding on the things that we publish on the platform, but if Musk’s messy year is good for anything, it’s reminding us how quickly things can get out of hand.

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NHTSA Sends Elon Musk a Cease & Desist Letter over Tesla Safety Claims

Tesla CEO Elon Musk received a cease-and-desist letter from the National Highway Traffic Safety Administration (NHTSA) over his claims that the …

Tesla CEO Elon Musk received a cease-and-desist letter from the National Highway Traffic Safety Administration (NHTSA) over his claims that the Tesla Model 3 is the safest car in the world.

Business Insider reports that in October 2018, the NHTSA sent a cease-and-desist letter to Tesla CEO Elon Musk over his claims that the Tesla Model 3 sedan is the safest car in the world. Transparency group PlainSite published the cease-and-desist letter this week along with other correspondence between Tesla and the NHTSA obtained via Freedom of Information Act (FOIA) request.

According to the letter dated October 17, 2018, Tesla made “a number of misleading statements” about the safety of its Model 3 sedan. CEO Elon Musk also promoted these claims via social media. This claim was linked to the 5-star rating that the NHTSA gave the Model 3 in Septembers, but according to the agency, the high rating does not equate to a car being “safer” than other cars with a 5-star label. The complaint highlights a Tesla blog post from October 7 in which the firm states that the Model 3 “achieves the lowest probability of injury of any vehicle ever tested by NHTSA.”

The NHTSA told Musk that this blog post along with his various other claims “misled customers.” At the time of the posting of the blog post, Musk shared a link to the post on his personal Twitter account and quoted Tesla saying: “There is no safer car in the world than a Tesla” and added himself: “The physics of how Tesla achieved best safety of any cars ever tested.”

The NHTSA issued a veiled response to Tesla which did not name the firm but stated that there was “no ‘safest’ vehicle among those vehicles achieving 5-star ratings.” In the published cache of correspondence between the NHTSA and Tesla, Tesla lawyer Al Prescott stated that “Tesla has provided consumers with fair and objective information.”

A lawyer for the NHTSA, Jonathan Morrison, stated that: “This is not the first time that Tesla has disregarded the guidelines in a manner that may lead to consumer confusion and give Tesla an unfair market advantage.” When questioned by Business Insider, Tesla referred to a letter from October 31st to the NHTSA in which the company states:

Tesla’s blog statements are entirely based on actual test results and NHTSA’s own calculations for determining relative risk of injury and probability of injury. Based on this published data, the Model 3 Long Range RWD has achieved a Vehicle Safety Score of 0.38 that translates to an overall probability of injury of 5.7%. NHTSA has rated almost 1,000 vehicles since the current NCAP began with the 2011 model year. We have compared these results to every other public test report. No vehicle has ever achieve an overall lower score.

Based on the foregoing, we do not see a reason to discontinue use of our safety blog or these statements as long as no other vehicle surpasses the Model 3 Long Range RWD’s Vehicle Safety Score and overall probability of injury. While we do not expect NHTSA to take sides among manufacturers, we had hoped NHTSA would welcome such an achievement because it was presented in an objective manner using the agency’s own data. Model 3’s achievement is exactly what NHTSA intended with the NCAP — to encourage manufactures to continuously improve safety.

Read the full report at Business Insider here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolanor email him at lnolan@breitbart.com

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From $420 To $230: Where Tesla Stands One Year After Elon Musk’s ‘Funding Secured’ Tweet

It’s been exactly one year since Tesla Inc (NASDAQ: TSLA) CEO Elon Musk posted his “funding secured” tweet that sent Tesla’s share price soaring.

It’s been exactly one year since Tesla Inc (NASDAQ: TSLA) CEO Elon Musk posted his “funding secured” tweet that sent Tesla’s share price soaring. At the time, the future seemed as bright as ever for Tesla and its investors.

One year later, shareholders would like to forget the now-infamous tweet and most of the bizarre year that followed.

Funding Not Secured

The tweet that started it all was posted at 12:48 p.m. on Aug. 7, 2018.

“Am considering taking Tesla private at $420. Funding secured,” Musk wrote.

Understandably, Tesla’s share price jumped 14% that day to an intraday high of $387 before closing at $379.

A week later, Musk provided an update on his mysterious funding, which he said in a blog post was coming from the Saudi Arabia sovereign wealth fund, a 5% owner of Tesla at the time. Musk said he left a meeting with Saudi representatives with “no question that a deal with the Saudi sovereign fund could be closed.”

On Aug. 15, the SEC sent subpoenas to Tesla for more information about Musk’s claims. On Sept. 27, the SEC filed a lawsuit against Musk accusing him of manipulating Tesla’s share price by making “false and misleading” claims in his “funding secured” tweet.

By that time, Tesla’s share price had sunk to $264, about 31.7% below its Aug. 7 peak.

SEC Settlement

After denying wrongdoing, Musk reached a settlement agreement with the SEC two days later in which Musk and Tesla were fined $20 million each and Musk would step down as Tesla chairman for at least three years. Soon thereafter, Tesla named Telstra CFO Robyn Denholm as its new chair.

On Oct. 4, Musk lashed out at the SEC, referring to it as the “Shortseller Enrichment Commission” on Twitter.

In a December interview with “60 Minutes,” Musk said: “Let me be clear: I do not respect the SEC.”

Also in December, Tesla added independent board members Larry Ellison and Kathleen Thompson-Wilson as part of Musk’s SEC settlement.

Musk once again got in trouble on Twitter on Feb. 19, 2019 when he tweeted that Tesla would “make around 500,000” vehicles in 2019 before quickly correcting himself and stating Tesla would be delivering “about 400k” vehicles.

The SEC was quick to ask the judge who oversaw Musk’s settlement to hold him in contempt of court for violating the terms of the settlement, since the production estimate tweets were not approved by Tesla. Musk once again denied any wrongdoing by claiming that the tweets were irrelevant to Tesla investors, an explanation the SEC said “borders on the ridiculous.”

See Also: ‘Concerning Trend’: Wall Street Weighs In On Tesla’s Q2 Earnings

Tesla’s Struggles Continue

In March, CNBC reported that, in a third round of Tesla layoffs, the company cut down its workforce by 8% in an effort to reduce costs.

Tesla also announced it would be closing most of its physical retail stores and shifting its operations online. After stiff backlash, the company announced later in the month that it changed its mind and would only be closing about 10% of its stores.

On April 24, Tesla reported a first-quarter loss that was far below Wall Street expectations, and the stock fell below the $250 level.

Stock Bottoms Out

Tesla shares made new lows in May when the company announced a $2-billion stock and debt offering after telling investors throughout 2018 it was not in need of capital.

Tesla shares finally bottomed out in late May at $176 after Tesla’s vice president of internal engineering became the latest in a parade of executives to leave the company. The $176 bottom represented a 54.5% drop from the post-“funding secured” high.

Tesla shares bounced when the company reported record second-quarter deliveries in-line with its guidance, but dropped once again when second-quarter losses came in larger than anticipated.

Happy Anniversary?

Perhaps it’s appropriate that Tesla marks the anniversary of Musk’s bizarre “funding secured” tweet with some more controversy. On Wednesday, documents posted on the website PlainSite said the U.S. National Highway Traffic Safety Administration filed a cease-and-desist order against Tesla back in October for making “misleading statements,” including claims that the Model 3 has “the lowest probability of injury of all cars the safety agency has ever tested.”

Consumer Reports has also had multiple run-ins with Tesla, choosing not to recommend the Model 3 due to quality and safety concerns.

Now that all the dust has settled on Tesla’s crazy year, the stock is trading around $230 per share at time of publication, down 40.9% overall in the past year. In that same stretch, the SPDR S&P 500 ETF Trust (NYSE: SPY) is up 0.4%.

For perspective, shares of Ford Motor Company (NYSE: F) are down 5.6% in that time, while shares of General Motors Company (NYSE: GM) are up 4% in the past year.

Photo by Steve Jurvetson via Wikimedia.

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A year later, Tesla could use buyout-like focus

CEO Elon Musk was upbraided for tweeting he had “funding secured” to take the carmaker private 12 months ago. Tesla now trades at barely half his …

Context News

Tesla shares were trading a little below $232 on Aug. 7, down nearly 39% from the level of exactly one year ago, when Chief Executive Elon Musk tweeted that he was “considering taking Tesla private at $420. Funding secured.”

Almost two months later the U.S. Securities and Exchange Commission filed a civil lawsuit against Musk, arguing he had made “false and misleading statements” about the prospects of a deal, which failed to materialize.

To settle the case, Musk agreed to step down as chairman for at least three years, submit his tweets to be reviewed by Tesla before being published and pay a $20 million fine. Tesla also had to pay the same amount as well as add two independent directors to its board.

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Feds Demanded Tesla To Stop Claiming Model 3 Safest Vehicle Ever Tested, Letter Reveals

… the National Highway Traffic Safety Administration’s chief counsel wrote to Tesla CEO Elon Musk, saying it “is impossible to say based on the frontal …

FREMONT (CBS SF / CNN) — A federal safety regulator demanded last fall that Tesla stop claiming the Model 3 is the safest car ever tested. But Tesla has stood by the claim.

Tesla says Model 3 occupants have “the lowest probability of injury of all cars the safety agency has ever tested.” The claim is still on the company’s website. But in a cease-and-desist letter dated October 17, 2018, the National Highway Traffic Safety Administration’s chief counsel wrote to Tesla CEO Elon Musk, saying it “is impossible to say based on the frontal crash results or overall vehicle scores whether the Model 3 is safer than other 5-Star rated vehicles.”

The letter came to light this week after an exchange of letters and emails between NHTSA and Tesla executives starting last October and running through February of this year was posted on Plainsight, a legal transparency website. The documents were released under a Freedom of Information Act request. It was first reported by Bloomberg.

NHTSA’s letter said this wasn’t the first time Tesla has violated agency guidelines for using the federal crash test data in marketing or advertising. The regulator said it was referring Tesla to the Federal Trade Commission’s Bureau of Consumer Protection to investigate whether the company had engaged in unfair or deceptive acts.

It is not clear from the documents if NHTSA or the FTC are pursuing action against Tesla at this time.

Tesla sent a response to that letter on October 31, 2018, standing by its analysis of NHTSA data.

“Tesla’s statements are neither untrue nor misleading,” said the letter sent to NHTSA from Tesla deputy general counsel Al Prescott. “To the contrary, Tesla has provided consumers with fair and objective information to compare the relative safety of vehicles having 5-star overall ratings.”

The automaker says that 40% of cars now have 5-star safety ratings from NHTSA, so “it is more important than ever to help consumers differentiate.”

A Tesla spokesman had no comment on Wednesday, and referred to the company’s letter to NHTSA as its position on the matter. NHTSA did not respond to a request for comment Wednesday morning, and a spokesperson for the FTC declined to comment.

The initial letter from NHTSA came just after the Securities and Exchange Commission and Tesla had reached a settlement over charges that Musk had deceived investors when he had tweeted in August that he had “funding secured” to take the company private. Tesla and Musk each agreed to pay $20 million to settle that dispute, and the SEC dropped its demand that Musk be removed as CEO.

© Copyright 2019 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten. CNN contributed to this report.

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