Tesla Shares Jump; Elon Musk Says Company Close To Achieving Profit

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Shares of Tesla Inc jumped by nearly 18 percent on Monday as Chief Executive Elon Musk settled a lawsuit that had threatened to force him out and said a surge in third-quarter production had driven it to the verge of profitability.

Over the weekend, Musk agreed to a settlement with the SEC that requires him to step down as Tesla's chairman and pay a $20 million fine.

Numerous reports suggested Musk and Tesla had declined to settle the case when the SEC initially brought the charges, and there have been no comment from either on the deal at time of writing.

Moreover, Both Tesla and Musk will pay $20 million in fines that will be distributed in a court-approved process to the investors that were potentially harmed by Musk's Twitter activity.

Going private would allow Tesla to avoid numerous pressures of the public markets, such as wild stock swings, scrutiny from Wall Street analysts, as well as "attacks" from short-sellers - a group that Musk has said 'want [Tesla] to die so bad they can taste it'.

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Investors anxious that heralded a long-drawn out fight with the regulator that would see Tesla lose its talismanic leader, undermine its ability to raise capital and cripple operations as it ramps up production of its crucial Model 3 sedan. When confronted by customers waiting for vehicles for which they've put down a payment, Musk has said Tesla is encountering difficulties delivering cars to customers due to a shortage of car-hauling trucks, but experts say no such shortage exists and that other automakers are shipping their cars around the USA just fine.

Mr Musk settled fraud charges with America's stock market watchdog and said that the company was close to profitability. Musk is staying on as CEO, but giving up his chairmanship. Musk won't be eligible to be re-elected as chairman for three years. The SEC alleged that Musk knew the plan was built on a shaky foundation when he proposed it. The SEC also filed papers that charged Tesla with failing to exercise proper oversight over Musk's actions and laid out a separate settlement of those charges.

Now attention is likely to shift to the figures for production and delivery of Tesla's electric cars, and particularly its Model 3 midsize sedan.

Tesla will now be appointing two new independent directors to its board.

Musk, a co-founder of Tesla, is the company's largest stockholder, owning approximately 22 per cent of its outstanding shares.