Tesla Confirms DOJ Probe into Musk Comments

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Last month, Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk tweeted that he had “funding secured” to take the electric car maker private. The stock jumped 10% within minutes.

Tuesday morning, Bloomberg News reported that sources said the U.S. Department of Justice (DOJ) was running a criminal investigation in parallel with the Securities and Exchange Commission (SEC) civil probe.

Tesla confirmed the DOJ investigation following Bloomberg’s report:

Last month, following Elon’s announcement that he was considering taking the company private, Tesla received a voluntary request for documents from the DOJ and has been cooperative in responding to it. We have not received a subpoena, a request for testimony, or any other formal process. We respect the DOJ’s desire to get information about this and believe that the matter should be quickly resolved as they review the information they have received.

Within days of Musk’s original tweet, he announced that the company indeed would remain publicly traded. His original tweet, he said, referred to what he understood to be a commitment from a representative of the Saudi sovereign wealth fund to repurchase Tesla shares at $420 a piece.

There must have been a failure to communicate. A Saudi sovereign wealth fund on Monday announced an investment of $1 billion in Silicon Valley startup electric automaker Lucid Motors which plans to launch its first vehicle, the Lucid Air, in 2020.

The SEC probe of Musk’s statements on taking Tesla private is focused on whether the company’s CEO was misleading investors. The DOJ investigation could be more wide-ranging and touch many aspects of Tesla’s business.

The company’s stock dropped about 7% following the Bloomberg report and traded down 3.4% just now at $284.92. The stock’s 52-week range is $244.59 to $387.46 and the consensus price target is $322.38. Since Musk walked back his comment about taking Tesla private, the company’s market cap has lost nearly 30% of its value.