Tesla (NASDAQ: TSLA) made a massive recovery after Monday trading. Investor confidence returned as it was announced that an agreement was reached for Tesla and Musk to pay a combined $40 Million fine to the SEC and remove Musk as Chairman. Tesla will now get two new members on its board, which analysts predict will work out well for the automaker.
The single day stock gains were the best in five years, and the company made back the public value that was lost during Musk’s now notorious Twitter controversy.
Elon Musk Hints at Profitability for the Growing Automaker
Elon Musk took to Twitter in August to tell investors that he was considering a buyout priced at $420 per share. Musk announced that funding was secured, despite no confirmed funding being in place.
This lead to an almost month-long investigation by the SEC which then turned to legal action last week. Rather than meeting the SEC in court, Musk and Tesla reached a settlement where both the CEO and company will pay $20 Million each in fines to the commission.
Investors are pleased that the SEC took a calculated approach to the punishment. The fines, while not insignificant, will not be enough to damage the company financially in the long run. The fines are instead intended to deter Musk from releasing misleading information in the future. Analysts are positive that changes in the board room will benefit the company in the long run, while Musk will retain his position as CEO.
Another factor in growing investor confidence is Musk’s recent announcement that Tesla is approaching profitability, something that the company has struggled for since its inception.
Stock market insiders are also positive about profitability. Global investment advisory firm, Guggenheim Partners, recently said that it’s transitioning from a stage of “cash burn to cash generation.” The firm also said that the company is now displaying “meaningful upward momentum.”
Tesla has overcome significant barriers to profitability, including addressing battery production and vehicle assembly bottlenecks.
How Tesla Stock Looks Ahead of Tuesday Trading
At the close of trading on Monday, the stock jumped 17.35%. This puts five-day gains at 3.23%, and one-month gains at 7.35%. Now could be an ideal time for interested investors to purchase stock, as prices are still significantly below the peak of $379 in August of this year.
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