Tesla investigated over undisclosed project

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【Summary】Tesla's stock has made a significant comeback in 2023, but it may be at risk due to an investigation by the SEC and DOJ into a secret project. The project, internally known as "Project 42," involved building a house for CEO Elon Musk. The regulators are looking into whether corporate funds were misused and the personal benefits Musk received. Tesla's stock price has been performing well, but the investigation adds uncertainty to its future.

FutureCar Staff Sep 02, 2023 9:30 AM PT

Tesla investigated over undisclosed project

In a surprising turn of events, Tesla's stock has experienced a remarkable resurgence in 2023, overcoming the obstacles that hindered its performance in the previous year.

After a challenging 2022, TSLA has emerged as a standout performer among major tech companies. Its stock price has more than doubled since the beginning of the year, signaling a striking revival and capturing the attention of investors worldwide.

However, the stock of the world's largest electric vehicle maker may face trouble as reports emerged on August 30 that top US regulators have launched an investigation into the company over a secret project.

The US Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) are currently probing Tesla's use of corporate funds on a project that was internally referred to as a house for CEO Elon Musk, according to the WSJ.

The US Attorney's Office for the Southern District of New York has requested information about the personal benefits Musk received, the amount of Tesla's investment in the project, and its purpose.

The project, known as "Project 42," was initially reported in July and involved the construction of a large glass structure in the Austin, Texas area. Tesla's board members investigated whether company resources were misused and if Musk was personally involved.

The SEC requires public companies to report transactions over $120,000 in which a related party, such as a top executive, receives a material interest. Now, the securities regulator is leading a civil investigation into this mysterious project and is demanding similar information from Tesla.

Tesla lawyers and board members examined the project after employees raised concerns about how the automaker planned to use millions of dollars in specialized glass that was ordered. The current status of the project and whether the glass ever arrived at Tesla remain unknown.

As of August 31, Tesla's shares were valued at $256.90, representing a 0.11% decrease in the past 24 hours. In premarket trading, the stock slipped by a further 0.53% to $255.55.

Over the past week, the automaker's share price has increased by more than 12%, while its monthly performance shows a negative 4%.

Year-to-date, TSLA remains up over 116%.

It is important to note that the ongoing investigations into Tesla are still in their early stages, and the outcomes are uncertain. The absence of formal allegations of wrongdoing highlights the speculative nature of these inquiries.

However, the possibility of regulatory escalation and legal action, should incriminating evidence emerge, adds an element of caution to the otherwise resurgent trajectory of Tesla's stock.

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