Tesla Face’s A New Investor Lawsuit Over Musk Tweets on 10% Stock Sales

Tesla faces a new lawsuit. as more investors are worried about his careless tweets. Previously in 2019, Tesla’s CEO faced a similar lawsuit over his tweet on making the company private. He settled the lawsuit by agreeing that he will have the company’s lawyers pre-approve tweets with material information about the company.

The new lawsuit was filed by David Wagner, an investor, in a Delaware court, under a Delaware law giving broad inspection rights to shareholders who credibly suspect corporate wrongdoing, Bloomberg law reported. 

There’s “a credible basis to believe that Tesla is, among other things, being mismanaged,” the suit says.

David Wagner asks for access to Teslas internal documents to investigate Whether Tesla and Elon violated the 2019 agreement. The lawsuit accuses Musk of continuing to tweet impulsively and recklessly violating the agreement that required the company to adopt strict new internal oversight procedures for monitoring his online statements.

“It is unclear who at Tesla, if anyone, is currently reviewing Musk’s tweets,” The lawsuit said. Tesla’s last full-time general counsel left in December 2019 and most recently acting general counselor, Alan Prescott, stepped down in April.

The lawsuit also expresses concern over the impact of Elon’s tweets on tesla stocks.

“Musk remains undeterred and continues to post on Twitter and social media on matters that are material to Tesla and its stockholders, and which ultimately have an impact on Tesla’s stock prices,” the suit says.

Tesla shares hovered to record high this year, but, lost their value by about one-fifth (allegedly 5% on Nov. 5 and another 12% on Nov. 6) after Musk tweeted on November 6 that he would sell 10% of his shares if Twitter users agreed. He has since sold 12.9million shares nearly worth 14 billion dollars. To hit the 10% mark, he would have to sell another 4.1 million shares. But even before this Elon’s comments on Twitter suggests that he was already planning to sell stocks to cover tax obligations.

Tesla stocks went down by 22% after Elon started selling stock on November 8. And just in the past month, it has gone down by 14%.

The suit also takes into account Musk’s recent “Twitter feud with Sen. Elizabeth Warren.” He insulted the Massachusetts Democrat this week on Twitter after she criticized his tax-paying habits.

“You remind me of when I was a kid and my friend’s angry Mom would just randomly yell at everyone for no reason,” Musk tweeted.

Tesla hasn’t made any comments on this yet. Also, Elon Musk isn’t a defendant in the lawsuit. The suit only requests access to internal documents.