Tesla CEO Elon Musk used Twitter to push back against the Securities and Exchange Commission on Tuesday, a day after the agency chastised him for sharing company information on the social media platform.
On Monday, the SEC moved to haveafter he tweeted about Tesla's likely production volume in 2019, saying he'd violated the terms of an agreement. The agency had forbidden him from using Twitter or other social media to pass along information that could be considered material to investors or Tesla without prior approval.
The SEC's call for action prompted a selloff in Tesla shares, which sank as much as 4.6 percent in after-hours trading Monday. The stock downturn prompted a Twitter commenter to suggest that the SEC's filing moved markets, not Musk's tweets.
"Exactly. This has now happened several times," Musk wrote, wrote on Twitter. "Something is broken with SEC oversight."
He responded with another "Exactly" when someone else noted that the information Musk tweeted had already been revealed in the company's fourth-quarter earnings call and a shareholder letter.
Musk has a Twitter minder, an experienced securities lawyer at Tesla who is tasked with vetting his communications. The minder is known as the Designated Securities Counsel, a position that was created after earlier SEC actions against the company and Musk.
Later Tuesday, US District Judge Alison Nathan ordered Musk to explain by March 11 why he shouldn't be held in contempt, Reuters reported.
Wall Street analysts weighed in on the clash Tuesday, offering both hope and hesitation for investors.
Maynard Um at Macquarie Capital pointed out that the SEC is likely looking for decisive action by Tesla's board. Even so, he wrote, the firm doesn't see a "material risk of a change to Mr. Musk's role at Tesla."
But that doesn't mean all's well.
"This new legal headache for both Elon Musk and Tesla," wrote Jeffrey Osborne at Cowen Equity Research, amounts to "a negative distraction for a company that needs to execute at this critical juncture." Cowen continues to see "major risks" given the company's valuation, cash needs and other factors.
Tesla shares on Tuesday closed down less than 1 percent, to $297.86.
The SEC, Tesla and Musk didn't respond to requests for comment.
Originally published Feb. 26 at 9:53 a.m. PT
Update Feb. 27 at 4:04 a.m.: Adds March 11 deadline for Musk to explain.