JPMorgan Sues Tesla for $162 Million over Elon Musk Tweet

JPMorgan Chase has sued Elon Musk’s Tesla for $162.2 million, accusing the electric car company of breaching a contract relating to warrants that were sold to the bank.

Warrants give the holder the right to buy a company’s stock at a set price and date.

The suit, filed in New York, centres on a dispute over how JPMorgan re-priced its Tesla warrants as a result of Musk’s notorious 2018 tweet that he was considering taking Tesla private.

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

The lawsuit is the latest fallout from Musk’s tweet, when he shocked Wall Street with a brief message: “Am considering taking Tesla private at $420. Funding secured.”

The tweet was posted after the Financial Times had reported that Saudi Arabia’s sovereign wealth fund had taken a $2 billion stake in the electric carmaker.

Following the tweet and reversing his private plan, the US Securities and Exchanges Commission accused Musk of securities fraud for misleading the market. He agreed to step down as Tesla’s chair and paid $40 million in penalties.

According to the complaint, Tesla in 2014 sold warrants to JPMorgan that would pay off if their “strike” price was below Tesla’s share price when the warrants expired in June and July 2021.

Tesla’s shares rose 4% on Tuesday, continuing their rebound from Musk’s multibillion-dollar selloff of shares. He sold another $973 million in stock to pay taxes after exercising options on Tuesday, filings showed.