JPMorgan Chase and Co are suing Tesla for $162.2 million. JPMorgan alleges that Tesla broke a contract related to stock warrants following Musk’s 2018 tweet about potentially taking Tesla private.
The complaint, filed in Manhattan federal court, notes that Tesla entered warrant transactions with JPMorgan. These stock warrants required Tesla to deliver shares of its stock or cash if its share price was above the contractual ‘strike price’ when the stock warrant expired. JP Morgan alleges that the bank’s stock warrants lost substantial value after the 2018 tweet, and remained well below Tesla’s share price upon expiring in June and July 2021.
In addition, the complaint alleges that JPMorgan demanded their due in shares or cash. However, Tesla flagrantly ignored its clear contractual obligation to the bank.
Musk noted in the tweet back in 2018 that he was considering taking Tesla private at $420 and that the company had already secured funding. He also stated that existing shareholders could either sell at $420 or hold shares and go private.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Tesla did not provide an immediate comment on the suit by JPMorgan.