Elon Musk News: 420 Tweet Costs Him the Chair and $20 Million
When a tweet is not just a tweet. How did a 420 joke become ‘Elon Musk News’ that started the unraveling of a man and his empire? Is it the cannabis?
In these pro-cannabis days, as country after country begins the process of legalization, it seems a shame that something as simple as a weed-related tweet can cost one of the most brilliant inventors in modern transport eco-technology his company. But it is a little more complicated than a tweet and a lawsuit; the latest Elon Musk news is that his 420 tweet was a direct manipulation of the stock market.
Musk’s tweet caused stock prices to plummet and two executives to leave the company. His later decision to share a blunt with Joe Rogan on air did nothing to assuage suspicions that he engages with the cannabis community. Other scientists in the community, like Neil deGrasse Tyson in New York, have spoken out against the judgment lodged on Musk’s personal life choices. After all, cannabis hasn’t a thing to do with his innovation or what he’s done for environmental technologies. Well, maybe he came up with some great ideas over some fine bud, but all the better. Clearly, smoking cannabis hasn’t hindered his business prowess.
The Tweet in question occurred on 7 August 2018. It read, “Am considering taking Tesla private at $420. Funding secured.” And was followed up by, “Shareholders could either to [sic] sell at 420 or hold shares & go private”.
Instantly, many on Twitter assumed the 420 reference was directly related to cannabis. This led some to believe the Tweet was just a light joke – others were outraged for reasons more strictly related to business. Then it became Elon Musk news.
For one, the Tweet shocked Tesla investors, who knew nothing of the potential to go private or to raise share prices. Musk shared information via Twitter that investors and shareholders should have been privy to prior to a public announcement. His claim of privatization and sell prices were concerning, as is the claim that he had ‘funding secured.’
Misleading Claims Spark Up Lawsuit
The fact is that Musk had not spoken to any investors or made significant moves to secure funding in order to privatize Tesla. His claims of secured investment were, then, actually false. Even if he had spoken to investors, his claim of funding being ‘secured’ is completely misleading.
Additionally, it caused Tesla shares to skyrocket. This is where the lawsuit stems from. The Security and Exchange Commission (SEC) are concerned that Musk’s claims were intentionally misleading in order to manipulate the market to benefit Tesla.
Why did he do it? Who knows. There seems to be some hint that he chose $420 to entertain his girlfriend, the pop singer Grimes. But why he lied about having secured funding is unclear.
The SEC lawsuit
SEC announced a lawsuit against Elon Musk for his manipulation of the market. Unsurprisingly, the announcement of the lawsuit was followed by a 10 percent drop in Tesla shares. This isn’t the first time in the last month, either. After Tesla’s infamous podcast with Joe Rogan, Tesla stock dropped 6 percent. Additionally, two Tesla executives resigned.
This hardly seems fair if their reasons are purely based on Musk’s enjoyment of cannabis. But it may have been linked to the controversies in other Elon Musk news from the past year, with this lawsuit being only the most recent in a string of regrettable decisions.
Settlement of the lawsuit
Following the tweet, Musk sent out an email to employees (each of whom own Tesla stock) explaining that a decision had not yet been made about privatizing. However, he did explain also that his consideration on this matter – while perhaps made with a slight joke on 420 – was absolutely serious and potentially in the works.
However, the consideration is not just his own. He must leave the decision up to the shareholders, who will be able to vote on the matter. But Musk seems to believe it’s a good choice for both the employees of the company, as well as for the productivity of the company in general.
That said, he didn’t have much choice but to settle the matter, which has cost both he and Tesla $20m each. Though the board at Tesla backed him, Musk, in his settlement, was required to step down from being a chairman. Fortunately, he was allowed to remain the CEO of the company, which consequently saw a spike in Tesla shares once more.
Would this have been as big a deal if Musk hadn’t involved cannabis in the issue? Maybe not. It’s clear that his tweets were thoughtless and careless business decisions, but what does cannabis have to do with it? Neil deGrasse Tyson was right in saying that cannabis shouldn’t come into play when judging Musk’s decisions, and shouldn’t be a factor in whether he’s the CEO of Tesla.