OPINION: It was another eyeroll-inducing earnings call from Elon Musk, writes columnist tpoletti. Will the SEC take notice?
Another Tesla Inc. earnings call, and another fanciful Elon Musk prediction that likely encouraged yet another open file at the Securities and Exchange Commission on Wednesday.
Based on Wednesday’s closing prices, the combined market capitalization of those two companies is about $4.4 trillion U.S. dollars. But at least he added a caveat — “That doesn’t mean it will happen or that it will be easy, in fact it will be very difficult, require a lot of work, very creative new products, expansion and always good luck.”
The situation Musk is in right now, though, is new. As the soap opera that has erupted from his deal to buy Twitter Inc. TWTR, +0.10% draws to a close, he is believed to need somewhere between $5 billion and $8 billion to finish off that deal, as our colleagues at Barron’s recently reported, and his only real avenue to that kind of cash is to sell Tesla stock.
It is very odd to announce a share repurchase plan before it is approved and officially put in place by a board of directors, though sharing the news early is not automatically a violation of securities laws, said Stephen Diamond, an associate professor at Santa Clara University School of Law. “There is an accounting test under Delaware law that the company must meet in order to buy back shares,” Diamond said in an email. “Generally, it can only buy back shares if there is a ‘surplus’ available. To assess that would require support from their internal finance team to the board and likely as well outside opinions from their auditors and legal counsel.”
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