Home > Auto > Cars > Tesla fights a $162.2 million lawsuit. Blame it on Elon Musk's tweet
Back in August 2018, Elon Musk tweeted that he might take Tesla private at $420 per share, and subsequently announced 17 days later that he was abandoning the plan.
Back in August 2018, Elon Musk tweeted that he might take Tesla private at $420 per share, and subsequently announced 17 days later that he was abandoning the plan.

Tesla fights a $162.2 million lawsuit. Blame it on Elon Musk's tweet

  • Elon Musk's announcement of making Tesla private and subsequently cancelling the plan created volatility in the company's share price.

Electric car manufacturer Tesla has been sued by JPMorgan Chase & Co for $162.2 million. The latter has accused that Tesla has "flagrantly" breached a contract the two corporate giants signed back in 2014 relating to warrants Tesla sold to the bank.

(Also Read: Tesla CEO Elon Musk sells stocks again, this time worth $973 million)

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Warrants give the holder the right to buy a company's stock at a set "strike" price and date. The lawsuit, filed in a US court, centres on a dispute over how JPMorgan re-priced its Tesla warrants as a result of Elon Musk's notorious 2018 tweet where he said that he was considering taking the carmaker private.

This is very unusual for a major Wall Street bank to file a lawsuit against such a high-profile client. However, JPMorgan has done relatively little business with Tesla over the past seven years, reports news agency Reuters.

In a statement, JPMorgan has said that it has provided Tesla multiple opportunities to fulfil its contractual obligations. "It is unfortunate that they have forced this issue into litigation," JPMorgan said. Tesla is yet to make any statement regarding the lawsuit.

As JPMorgan has claimed, Tesla back in 2014 sold warrants to JPMorgan that would pay off if their ‘strike’ price was lower than Tesla's share price when the warrants expired back in June and July 2021.

Back in August 2018, Elon Musk tweeted that he might take Tesla private at $420 per share, and subsequently announced 17 days later that he was abandoning the plan. This created significant volatility in the share price of the automaker, claimed JPMorgan. On both occasions, JPMorgan adjusted the strike price to maintain fair market value as prior to the tweets, claimed the bank. Meanwhile, Tesla's share price increased approximately ten-fold by the time the warrants expired earlier this year.

  • First Published Date : 17 Nov 2021, 03:09 PM IST

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