On average, a group of Tesla investors recovered about $12,000 in losses each, since Elon Musk famously tweeted in 2018 that he had “funded” at $420 per share. privatized the automaker, but did not do so later.
The SEC plans to pay investors $40 million, plus interest agreed to by Tesla’s chief executive and the company, as a civil penalty to settle the regulator’s lawsuit. That’s just over half of the $80 million the SEC estimated Tesla lost due to stock price swings after the tweet, and was calculated by Tesla investors earlier this year in a separate class-action trial. A fraction of the $12 billion in losses.
The SEC asked a judge to give final approval to the plan in a court filing Wednesday night.
If the plan is approved, a total of 3,350 claims will be paid out of the fund established by the settlement, the document said. That works out to an average investment of just under $12,400 per investor. If Tesla or the world’s richest man, Musk, has no objections, he will sign off on the plan on Sept. 1, a judge said on Thursday.
I’m considering taking Tesla private for $420. Funding is secured.
— Elon Musk (@elonmusk) August 7, 2018
What accounts for the large gap between the estimated loss of $80 million and $12 billion? It’s not entirely clear, but the experts’ numbers apply to all Tesla investors’ losses in the 10 days following the Aug. 7, 2018, tweet. The SEC data covers a little more than 27 hours after the tweet, excludes options and derivatives trades, and applies only to Tesla common stock. Not all accredited investors make claims.
Investors in the class-action case lost a trial in February, when a jury took just two hours to clear Musk’s claims that he had deceived them through tweets. The case is one of a handful of corporate securities fraud charges to go to trial. The vast majority were abandoned or settled.
Investors are attractive.