By Carlo Versano
Shares of Tesla dropped Tuesday on news the Department of Justice had launched a criminal investigation into Elon Musk's now-infamous tweet about taking the company private.
The probe is on top of an SEC inquiry and raises the stakes for Tesla and its mercurial chief executive, said Mark Spiegel, a managing member of Stanphyl Capital and a vocal Tesla short-seller.
"There's never just one cockroach," he said Tuesday in an interview on Cheddar.
In a statement to Cheddar confirming the investigation, a company spokesman said, “Tesla received a voluntary request for documents from the DOJ and has been cooperative in responding to it. We have not received a subpoena, a request for testimony, or any other formal process. We respect the DOJ’s desire to get information about this and believe that the matter should be quickly resolved as they review the information they have received."
The company's latest problems began when Musk tweeted in early August he had secured funding from a Saudi Arabian investment fund to take the company private at $420 a share. He ultimately admitted that statement was premature, and a series of other missteps by the CEO sent shares down as much as 33 percent from recent highs. After a seemingly-rare sandal-free stretch, the stock was actually up 12 percent last week, but Tuesday's news ended that run.
Spiegel said Tesla's problems are "coming to a head" and he expects Musk will not remain CEO for much longer, especially now that federal investigators are snooping around in the company's affairs.
Worsening matters for Tesla, competition in the luxury electric car space is just now accelerating; high-end models are in the works at Audi, Jaguar, Mercedes, and Porsche.
"The only thing that's been running this stock has been hype," Spiegel said.
For full interview click here.