Tesla’s stocks have wiped out all of their gains from earlier this week — in just two days.
It was triggered by reports in the last couple of days that the US corporate regulator has been scrutinising the company.
The electric carmaker’s shares fell almost 5 per cent overnight, making it one of the worst performing stocks on Wall Street’s Nasdaq index.
Investors have begun to doubt whether Tesla’s boss Elon Musk can indeed take the company private, an idea which he announced on Twitter.
The US Securities and Exchange Commission (SEC) has been looking into Tesla’s public statements, according to a Bloomberg report on Thursday (local time), citing two unnamed people familiar with the matter.
In particular, it has been looking into Tesla’s public statements on sales targets and production numbers.
Tesla shares also fell 2.4 per cent on Wednesday (local time), in response to a Wall Street Journal report that the SEC had also asked Tesla why Mr Musk announced his plans on Twitter (instead of a regulatory filing), and whether his statement (that the company had secured private funding) was truthful.
Short sellers, who bet that shares will fall and have been a longtime irritant to Mr Musk, increased their positions slightly on Thursday.
Tesla disclosed in its most recent quarterly report that it has “received requests for information from regulators and governmental authorities”, including the SEC.
The company did not disclose in its filings the details of those requests or its responses.
Legal implications for Tesla
Mr Musk could potentially face investor lawsuits if it was proven he did not actually have secure financing at the time of his tweet.
“The words ‘financing secured’ are the danger point — that’s a statement of fact and