JPMorgan Chase said it’s suing Tesla to get compensation for about $162 million it says it lost from a series of tweets by chief executive Elon Musk in August that have since forced the billionaire to step away from the company.
The lawsuit is the first to surface since Musk surprised investors by saying he’d taken the company private. He later came back with a September 7 update to the same narrative, stating that he still intended to take Tesla private at a price of $420. The early-morning post drove down Tesla’s share price by about 20%.
“It is possible that some of our business suffered due to the disruptions caused by Tesla and Musk’s tweets,” said Thomas Hickey, a spokesman for JPMorgan Chase. “There is also the issue of the company’s ability to recruit and retain key talent.”
For his part, Musk argues the lawsuit is ridiculous. He won’t settle and doesn’t want to pay JPMorgan any money, according to a person familiar with the matter.
Hickey added that Musk’s tweet didn’t explicitly request that investors take a position on his proposed privatisation but took an implicit stand on the subject.
In a prepared statement, Tesla said it “does not believe it should be held liable for tweets made by its executive chairman, Elon Musk.”
Tesla is likely to be in the market for a new chief executive, according to an analyst. But it could struggle to find a suitable candidate to join a company that is on the receiving end of what may be the most damaging crisis in its history.
“My guess is a high profile CEO will be required, someone more moderate, like Intel’s Brian Krzanich,” said John Murphy, a Deutsche Bank analyst.
Musk has been the centerpiece of Tesla since founding the company in 2003, with legendary speed, single-mindedness and ambition. He stepped down as chairman in June, leaving the non-executive chairman role to Doug Bourn. In the months before this incident, Musk had indicated he would step back from day-to-day operations.
He continued to head the company but only on a day-to-day basis, including with the release of his tweets. But the stakes are now much higher, and the consequences are far graver, since they were made public at 2.30am on a Saturday.
“The rhetoric surrounding the health of Elon Musk’s state of mind became unsustainable for anyone to attempt to lead the business,” Hickey said.