On May 7 a Tesla Motors Inc. (NASDAQ:TSLA) owner named Joshua Brown died in Florida while his vehicle was on autopilot mode.
That means to say that Brown’s hands were not on the wheel at the time of the fatal crash. Tesla has since claimed that it informed the relevant authorities of the incident, which is surely of great interest to Tesla owners and anyone following the development of self-driving cars, writes Carol J. Loomis for Fortune.
Crash death news not announced until after public offering
“Following our standard practice,” Tesla said in a statement issued last Thursday, it “immediately” told the National Highway Traffic Safety Administration about the fatal crash. However the NHTSA did not immediately pass on the news to the public.
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Despite the fact that many people would surely want to know about the incident, the NHTSA only made an announcement on Thursday 30 June. That’s nearly 8 weeks after the crash occurred.
It might sound bad that the NHTSA sat on the news, but Tesla did something even stranger. Eleven days after Brown’s death, Tesla and its CEO Elon Musk sold over $2 billion in company stock in a public offering at $215 per share.
Tesla was responsible for 75% of the offering, while Musk-owned shares made up the remaining 25%. They sold shares after a fatal crash without telling the public, or new investors, anything about it.
Musk says news not material to value of company
The electric carmaker has been marketing its autopilot technology as safe to use. However when someone died while using this technology, the company did not disclose the fact.
When news of the crash surfaced, the Tesla share price fell from $212 to $206 on Thursday. However it then rebounded to over $216. The stock also rose on Friday, just a day after the announcement was made.
According to a Tesla public relations executive, this goes to show that the crash news was not a material fact and therefore it was not necessary to disclose the information between the public offering. A journalist at Fortune tried to question Tesla on the issue, and received a reply from CEO Musk in which he claimed that the news “is not material to the value of Tesla.”
He continued, “Indeed, if anyone bothered to do the math (obviously, you did not) they would realize that of the over 1M auto deaths per year worldwide, approximately half a million people would have been saved if the Tesla autopilot was universally available. Please, take 5 mins and do the bloody math before you write an article that misleads the public.” It is unclear how that response in any way answers the question and why Tesla Motors Inc. seems to try to bury bad news, but Elon Musk has taken to twitter to vent his fury.
@alansmurray Yes, it was material to you — BS article increased your advertising revenue. Just wasn’t material to TSLA, as shown by market.
— Elon Musk (@elonmusk) July 5, 2016
@alansmurray If you care about auto deaths as material to stock prices, why no articles about 1M+/year deaths from other auto companies?
— Elon Musk (@elonmusk) July 5, 2016
The question of whether it was material or not may be settled in court rather than an email exchange. There may be lawsuits filed over the strange course of action from the electric carmaker.