Tesla founder and CEO Elon Musk’s fraud charge could spark positive change at Tesla, Loup Ventures’ Gene Munster told CNBC on Thursday.
The fraud charge for Tesla founder and CEO Elon Musk could spark positive change at the electric car maker, Loup Ventures’ Gene Munster told CNBC on Thursday.
“I think this is actually, strange as it sounds, may be a positive force for some change at the company. We’ve been advocating that Elon has a different role — stays at Tesla but different visionary role, non investor-related focus. I think there’s an opportunity this will pave the way for some of that,” Munster said on “Closing Bell.”
Musk has been sued by the Securities and Exchange Commission for fraud, according to court documents filed Thursday. Sources close to the company told CNBC the company was also expecting to be sued, though Tesla was not named as a defendant in the complaint. In August, Musk tweeted that he was considering taking Tesla private, adding “funding secured.” The tweet spurred a scandal-ridden fall for Tesla and sent the stock see-sawing for weeks.
Munster said he thinks it’s unlikely Musk will be removed from the company, a fear he says is fueling Tesla’s sharp after-hours decline.
“Investors are jumping to that conclusion…that will be on investors minds’ for a long time. But that is only one of four remedies for being found guilty of securities fraud, and keep in mind, he has not been found guilty,” Munster said.
Although he thinks the charge could push Musk into a position that better suits his talents for “product and vision” at Tesla, he admitted the news “plays into the difficulty that Tesla is having,” and will likely keep Tesla’s stocks “range-bound for probably the next three months.”
“The most important part is that he remains an important part of the fabric of that company … and he can do that without having a spot on their board or an investor-facing role,” Munster said.
Oppenheimer Senior Analyst Colin Rusch agreed there is a need for additional leadership at Tesla. He compared Tesla to Apple, which saw its stock appreciate “pretty significantly” for several years after CEO Steve Jobs left.
“We wouldn’t be surprised to see Musk settle this fairly quickly,” he said. “He probably does want to stay involved in the company in an active way and will try to do that.”
Shares of the automaker fell roughly 10 percent in extended trading Thursday.
— CNBC’s Sara Salinas contributed reporting.
