Oops, I Did It Again

Old Britney Spears songs are not normally a source of inspiration for me, but this one feels especially apropos right now.  You see, after being chastised by the SEC for certain tweets last year, Tesla’s CEO Elon Musk is  – oops, doing it again:

Musk Tweet 2.19.2019 - 1

This tweet was about material information for Tesla – annual vehicle production, a figure for which it provides guidance.  The tweet implied guidance different from that provided just a few weeks earlier in fourth quarter 2018 earnings, when Tesla said it was “targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020.”  Well, somebody must have said something to Musk, because a few hours later he corrected himself, tweeting:

Musk Tweets 2.19.2019 - 2

This situation is problematic from at least two perspectives:

First, while Twitter can be a useful communication tool, as discussed in a previous post (Loose Lips Sink Ships, August 15, 2018), one tweet on a material topic can rarely, if ever, contain enough information or context for a reasonable investor to make an informed investment decision.  That’s why it’s considered a best practice to issue a press release and/or file an 8-K and refer to or link to that more fulsome source when tweeting on a material topic.

Second, and more specific to Tesla, it points to the need to have a process to vet communications about a company to determine a statement’s accuracy and/or completeness, its materiality and any relevant SEC disclosure requirements.  Setting up such a process is exactly what Tesla agreed to as part of the company’s settlement of securities fraud charges with the SEC last fall, and Tesla’s Board was tasked with overseeing its implementation.

This incident makes me wonder “how’s that working out?”  I guess the news that Tesla’s general counsel – the person who helped negotiate this SEC settlement – is leaving the company after just two months, partly answers that question.

It seems when it comes to Musk and Twitter, Britney’s line from this song: “… to lose all my senses that is just so typically me” appears all too true.

Lisa Ciota
Lead-IR Advisors, Inc.