Tesla shares jump on Model 3 numbers, Musk deal
CALIFORNIA (Reuters) - Shares of Tesla Inc jumped by almost 18 percent as Chief Executive Elon Musk settled a lawsuit that had threatened to force him out and said a surge in third-quarter production had driven it to the verge of profitability.
Tesla fans cheered the signs of a manufacturing jump while business analysts said the company needed to fulfill the spirit of the settlement by appointing a strong independent chair and new directors.
The electric carmaker’s shares sank last week after the US Securities and Exchange Commission accused Musk of securities fraud and sought to ban him from company leadership, pointing to a long drawn-out fight that could have undermined Tesla’s operations and ability to raise capital.
Instead, under a settlement announced at the weekend, Tesla and Musk will pay $20 million each to the regulator and Musk will step down as chairman but stay as CEO, keeping one of America’s best-known corporate figures in place.
In a sign of the manufacturing process improving, Musk in an email to employees on Saturday said the company was “very close to achieving profitability”. He added, “To be certain, we must execute really well tomorrow.” Sunday was the last day of the quarter.
Automotive news website Electrek reported that Tesla had produced 53,000 of its Model 3 sedans in the third quarter, up from 28,578 in the previous three months and making good on a promise in August it would produce 50,000 to 55,000 of the cars. It produced about 80,000 vehicles overall, the site said.
Tesla did not immediately respond to a request for comment.
Relief at the settling of the lawsuit drove the biggest one-day gain in Tesla shares in more than five years.
“The stock was down so much on Friday because it was unclear if he would remain with the company at all given what the SEC was pushing for,” said Garrett Nelson from CFRA Research.
“A $20 million fine is very small, allows him to stay there and also introduces some healthy governance measures.”