While Tesla continues to prove its doubters wrong as an automotive and energy business, the ongoing social media sideshow hangs over its finances. The stock rose to $310.70 per share on Monday, after Musk agreed to settle with the SEC last weekend. But the company ended this Friday around where it had been a week before, at $261.95 per share, seemingly driven by investor fears over the chief executive’s ongoing Twitter problem.
The SEC needs to help creative but impulsive entrepreneurs like Musk get off of social media and focus on building their companies—by being fair but firm.
So far, it’s been too easy, and that’s setting the wrong precedent. When companies go public, they’re agreeing to put the interests of their shareholders first. Impulsive tweeting breaks that bargain.
Once Musk rejected the first settlement, the SEC could have proceeded with its lawsuit and set an example. Musk’s tweets were just the kind of egregious behavior that would have been an easy win in court. The SEC wouldn’t have needed to prove any intent by Musk to defraud. It would’ve just had to prove that it was more likely than not that Musk had disclosed a materially false fact or a misleading one without context—not a high bar when you consider the very flimsy basis for Musk’s tweets.