Tesla ends down almost 14% amid US fraud charges against Musk

Tesla CEO Elon Musk gave “false and misleading” statements, according to the SEC, which has charged him with fraud and is seeking to bar him from serving as an official of a publicly-traded company. (AFP pic)

NEW YORK: Tesla shares plummeted almost 14% on Friday on worries about the electric car maker’s future after US securities regulators charged Chief Executive Elon Musk with fraud.

Tesla’s fall, along with a decline in Facebook following a new data breach, weighed on the Nasdaq Composite Index, which still edged up 0.1% to 8,046.35.

The Dow Jones Industrial Average also gained 0.1% to 26,458.31, while the broad-based S&P 500 was essentially flat at 2,913.98.

The case centres on Musk’s now-aborted push to take the company private last month, with the US Securities and Exchange Commission accusing Musk of making “false and misleading” statements.

Much of the investor unease centred on the SEC’s demand that Musk be barred from serving at a public company, an outcome considered potentially devastating to Tesla.

The SEC complaint marks “a potential serious blow to the company,” said CFRA Research, which lowered its price target on Tesla shares.

“Despite Musk’s recent erratic behavior, we think most investors want him to remain with the company and they value shares at what we view as extremely lofty multiples given the potential for Musk’s vision to drive future growth.”

Facebook was also under pressure, losing 2.6% after disclosing that up to 50 million accounts were breached by hackers, dealing a blow to the social network’s effort to convince users to trust it with their data.

Market sentiment was fairly muted on the whole, after fresh data showed that US inflation data moderated in August, easing the pressure on the Federal Reserve to accelerate from its moderately paced interest rate hikes.

Investors were also watching the political fallout after the Italian government reached a deal for a much larger than expected deficit, raising the ire of Brussels.

Among other US companies, Dow member Walgreens Boots Alliance lost 1.2% after it agreed to pay US$34.5 million to settle charges it did not adequately disclose the risks of a merger between Walgreens and Alliance Boots that was announced in 2012.