Zinger Key Points
- Tesla shares have been volatile this year but remain one of the biggest gainers among mega-cap stocks.
- Back between 2017 and 2019, the company was struggling with a cash crunch but has emerged out of the crisis successfully.
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Tesla, Inc. TSLA shares are on a recoil in recent weeks as investors fret over contracting margins and a lukewarm demand environment. All the same, the stock has come a long way from its humble debut on Wall Street.
Musk In Legal Tangle: The strong rise in the stock can be better appreciated if one looks back at a time when CEO Elon Musk was struggling with a liquidity crisis ahead of the Model 3 launch. He even flagged a potential bankruptcy filing and by his own admission even approached Apple CEO Tim Cook to negotiate a potential sale.
It was amid this that Musk sent out the infamous "funding secured" tweet, which continued to haunt him well after. "Am considering taking Tesla private at $420. Funding secured," he said.
Tesla stock rose on the day of the tweet, rising to an intraday high of $387.46 (pre-split), but soon fell below the pre-tweet price of $344. In a month, it dropped all the way to $263.24.
But shareholders, who burnt their fingers due to the stock plunge in the aftermath of the tweet, sued Musk for misleading them and claimed monetary damages from Tesla, Musk and the company's other directors. The Tesla CEO stated later that he made the announcement after discussions with the Saudi sovereign wealth fund.
A verdict was announced following a three-week trial in February when the U.S. District Court of California ruled that Musk was not liable for the losses suffered by the shareholders.
In a related lawsuit brought out by the SEC, Musk had to reach a settlement agreement with the regulator. The settlement agreement called for Musk stepping down as chairman of the company and Tesla as well as Musk paying $20 million each.
See Also: Everything You Need To Know About Tesla Stock
Stock Rally: As the dust settled, Tesla stock did recover and continued to surge as fundamentals improve. The mass-market Model 3 ramp-up helped the company to increase volume considerably and the company followed it up with the Model Y SUV, which turned out to be another hot-selling product from Tesla's stable.
Chart Via Benzinga Pro
Returns From Tesla: A $1,000 invested in Tesla at a split-adjusted price of $25.30 on Aug. 7, 2018, would have fetched 39.53 shares. The same number of shares would be worth about $10,034 today. This translates to a return of 1,003% over a five-year period.
In premarket trading on Monday, Tesla stock rose 0.47% to $255.06, according to Benzinga Pro data.
Check out more of Benzinga’s Future Of Mobility coverage by following this link.
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