Tesla Shares Jump; Elon Musk Says Company Close To Achieving Profit

Tesla Shares Jump; Elon Musk Says Company Close To Achieving Profit

Tesla Shares Jump; Elon Musk Says Company Close To Achieving Profit

Shares of Tesla jumped as much as 17 percent on Monday as Elon Musk settled a lawsuit from federal regulators and a report said the company has hit its quarterly production targets.

The US Securities and Exchange Commission said on Saturday that car-maker Tesla and Chief Executive Elon Musk had agreed to pay $20 million each under a settlement that will also see the billionaire step down as chairman after a tumultuous two months for the company.

Musk's dispute with the SEC arose from an August 7 tweet in which Musk claimed to have "funding secured" to take the company private at $420 per share.

The SEC's lawsuit had sought to bar Musk from serving as an officer or director of a public company, a prospect that rattled investors. Bearish investors have been circulating photos of parking lots packed with Tesla vehicles that are uncovered and exposed to the elements as the carmaker has been going through what Musk has coined on Twitter to be "delivery logistics hell". Shareholders are betting the company is on the cusp of stemming losses and cash burn thanks to its lower-priced Model 3 sedan.

Tesla is now valued at about US$51.8 billion in the stock market, taking back the title of the top USA automaker by market capitalization from General Motors Co.

As part of the settlement with the SEC, Tesla will appoint an independent chairman, two independent directors, and a board committee to set controls over Musk's communications under the proposed agreement. This sees the CEO and Tesla each paying a $20 million fine, while Musk will be replaced by an independent Chairman, unable to put himself up for re-election for a minimum of three years.

Besides the settlement news, Tesla has another milestone this week.

Neither Musk nor Tesla admitted or denied the SEC's findings under the settlement, which still must be approved by a court.

Tesla has turned to an army of volunteers to help it meet ambitious third quarter auto production targets after a bruising few days for chief executive Elon Musk, who was forced to pay $20m in order to settle a dispute with USA regulators.

But several experienced litigators also said that, while the DOJ probe is separate, the SEC's settlement might mark the end of official action against Tesla and Musk.

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