Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

JPMorgan sues Tesla for $162m after Musk tweets soured share deal

JPMorgan sues Tesla for $162m after Musk tweets soured share deal

Investment bank says it lost millions because of tweets by Elon Musk that he might take electric carmaker private
JPMorgan has sued Tesla for $162.2m, accusing Elon Musk’s electric car company of “flagrantly” breaching a 2014 contract relating to stock trading options that Tesla sold to the bank.

The options, or warrants, give the holder the right to buy a company’s stock at a set “strike” price and date. The suit, filed in a Manhattan federal court, centres on a dispute over how JPMorgan repriced its Tesla warrants as a result of Musk’s notorious 2018 tweet that he was considering taking the carmaker private.

It is unusual for a major Wall Street bank to sue such a high-profile client, although JPMorgan has done relatively little business with Tesla over the past seven years, according to Tesla’s filings and Refinitiv data.

“We have provided Tesla multiple opportunities to fulfil its contractual obligations, so it is unfortunate that they have forced this issue into litigation,” a spokesperson for JPMorgan said in a statement.

Tesla did not respond to requests for comment.

The options agreement meant that if Tesla’s share price was at or above the strike price of $560 on the day the warrants expired in June and July 2021, it would owe JPMorgan the difference between the share price on that date and $560.

So, given that Tesla’s stock was worth more than $600 by June this year, JPMorgan stood to make a decent profit.

But it wants an extra $162m because it argues that the warrants contained standard provisions that allowed it to adjust the strike price downwards to protect itself against the economic effects of “significant corporate transactions involving Tesla”.

The bank argues that Musk’s tweet on 7 August 2018 that he might take Tesla private at $420 a share – at that point the shares were worth $341.99 – was just such a significant moment. With a buyout price set at $420, JPMorgan could not reach its strike price of $568 and therefore would not make any money. Accordingly, JPMorgan adjusted the strike price downwards, therefore increasing the chance of profit.

JPMorgan said in its complaint that Tesla had failed under its contract to hand over the agreed amount of its stock or cash. The bank said Tesla’s failure to do that amounted to a default.

“Though JPMorgan’s adjustments were appropriate and contractually required,” the bank’s complaint said, “Tesla has flagrantly ignored its clear contractual obligation to pay JPMorgan in full.”

JPMorgan said Tesla had replied that the bank’s adjustments to the strike price were “an opportunistic attempt to take advantage of changes in volatility in Tesla’s stock”. But Tesla did not challenge the underlying calculations, JPMorgan said.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Hungary Ranked Among the World’s Safest Travel Destinations for 2025
G7 Leaders Fail to Reach Consensus on Key Global Issues
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Shock Within Iran’s Leadership: Khamenei’s Failed Plan to Launch 1,000 Missiles Against Israel
Wreck of $17 Billion San José Galleon Identified Off Colombia After 300 Years
Man Convicted of Fraud After Booking Over 120 Free Flights Posing as Flight Attendant
Iran Launches Extensive Missile Attack on Israel Following Israeli Strikes on Nuclear Sites
Beata Thunberg Rebrands as Beata Ernman Amidst Sister's Activism Controversy
Hungarian Parliament Approves Citizenship Suspension Law
Prime Minister Orbán Criticizes EU's Ukraine Accession Plans
Hungarian Delicacies Introduced to Japanese Market
Hungary's Industrial Output Rises Amid Battery Sector Slump
President Sulyok Celebrates 15 Years of Hungarian Unity Efforts
Hungary's Szeleczki Shines at World Judo Championships
Visegrád Construction Trends Diverge as Hungary Lags
Hungary Hosts National Quantum Technology Workshop
Hungarian Animation Featured at Annecy Festival
Israel Issues Ultimatum to Iran Over Potential Retaliation and Nuclear Facilities
UK and EU Reach New Economic Agreement
Coinbase CEO Warns Bitcoin Could Supplant US Dollar Amid Mounting National Debt
Trump to Iran: Make a Deal — Sign or Die
Operation "Like a Lion": Israel Strikes Iran in Unprecedented Offensive
Israel Launches 'Operation Rising Lion' Targeting Iranian Nuclear and Military Sites
UK and EU Reach Agreement on Gibraltar's Schengen Integration
Israeli Finance Minister Imposes Banking Penalties on Palestinians
U.S. Inflation Rises to 2.4% in May Amid Trade Tensions
Trump's Policies Prompt Decline in Chinese Student Enrollment in U.S.
Global Oceans Near Record Temperatures as CO₂ Levels Climb
Trump Announces U.S.-China Trade Deal Covering Rare Earths
Smuggled U.S. Fuel Funds Mexican Cartels Amid Crackdown
Austrian School Shooting Leaves Nine Dead in Graz
Bezos's Lavish Venice Wedding Sparks Local Protests
Europe Prepares for Historic Lunar Rover Landing
Italian Parents Seek Therapy Amid Lengthy School Holidays
British Fishing Vessel Seized by France Fined €30,000
Dutch Government Collapses Amid Migration Policy Dispute
UK Commits to 3.5% GDP Defence Spending Under NATO Pressure
Germany Moves to Expedite Migrant Deportations
US Urges UK to Raise Defence Spending to 5% of GDP
Israeli Forces Intercept Gaza-Bound Aid Vessel Carrying Greta Thunberg
IMF Warns of Severe Global Trade War Impacts on Emerging Markets
Low Turnout Jeopardizes Italy's Citizenship Reform Referendum
Transatlantic Interest Rate Divergence Widens as Trump Pressures Powell
EU Lawmaker Calls for Broader Exemptions in Supply Chain Legislation
France's Defense Spending Plans Threatened by High National Debt
European Small-Cap Stocks Outperform U.S. Rivals Amid Growth Revival
Switzerland Proposes $26 Billion Capital Increase for UBS
×