Tesla CEO’s Post Adds to Fray Over Social Media Comments
Tesla Motors Inc. (TSLA) Chief Executive Officer Elon Musk stoked the controversy over giving out corporate information on social media with a Twitter post that the electric-car company will make a “really exciting” announcement next week.
The company’s shares rose for a second day after Musk wrote yesterday that he planned to “put my money where my mouth is in v major way” on April 2. The 41-year-old billionaire said he pushed back the timing of the Palo Alto, California-based Tesla’s announcement from March 28, the date given in an earlier post, “to ensure no end of quarter distractions.”
Social network posts by CEOs have raised questions because of a Securities and Exchange Commission rule that limits how companies can disseminate information about material events. Netflix Inc. (NFLX) said in December that it and CEO Reed Hastings faced a potential civil claim by the SEC over a July message on Facebook about the company’s customer viewership data. The post coincided with Netflix shares’ biggest gain in almost six weeks.
Tesla has a goal of becoming profitable this quarter, with deliveries of the battery-powered Model S forecast to rise to a record 20,000 in 2013. The company said earlier this month that it will repay by December 2017 the $465 million in U.S. Energy Department loans it received to develop and build electric cars.
The company is “still working out the details of the announcement” and doesn’t plan to have a presence at this week’s New York auto show, Shanna Hendriks, a spokeswoman, said in an e-mail. Musk didn’t respond to an e-mail.
In December, Musk posted to Twitter that Tesla was cash flow positive during the last week of November. The company has yet to report a quarterly profit in its three years as a public company.
The SEC adopted its Regulation Fair Disclosure in 2000, before the widespread use of social-media outlets such as those of Facebook Inc. (FB) and Twitter Inc. The rule, intended to stop selective disclosure of important information, requires that companies distribute such announcements through a press release or widely disseminated news or wire service, or by “any other non-exclusionary method” that provides broad public access.
To contact the reporter on this story: Craig Trudell in Southfield, Michigan at firstname.lastname@example.org
To contact the editor responsible for this story: Jamie Butters at email@example.com