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Elon Musk is a chaos monkey who creates problems more quickly than he can resolve them.

Expand chart
Data: FactSet; Chart: Andrew Witherspoon/Axios

A perfect case in point: Hours before signing a settlement to pay the SEC $10 million and step down as chairman of Tesla for two years, Musk changed his mind, precipitating an SEC lawsuit and the destruction of more than $7 billion in wealth as Tesla stock promptly plunged on Friday. So then Musk unchanged his mind, agreeing to pay a $20 million fine and step down as chairman for three years.

  • The punishment is worse than it would have been if Musk had settled on Thursday, but it's still largely a slap on the wrist, and it indeed puts Musk and Tesla on a significantly stronger footing, governance-wise, than they were before Musk's fateful (and very expensive) tweet.
  • Musk still faces many legal threats, but the SEC lawsuit was the most salient for Tesla shareholders.
  • That's because Tesla is still burning through $1 billion a quarter. Investors don't love to lend money to a cashflow-negative company that has never made a profit, is at war with its regulator and already has more than $11 billion in debt.

Quick take: When companies die, it's nearly always because they can't raise money. That, ultimately, is why Musk swallowed his pride and settled with the SEC. He can't afford to be in a fight with the SEC when he inevitably returns to the debt markets to ask for more money.

  • The chart above shows that the Tesla debt window probably hadn't shut completely. Even with Tesla stock at its post-lawsuit low, there was still a huge equity cushion, and in a worst-case scenario, there are any number of companies that would be willing to buy Tesla for much more than the value of its debt.
  • If you lend Tesla money, you're lending against an asset, which is the company itself. And there's always going to be a buyer for Tesla at a price above $11 billion.
  • But stock-price chaos is always reflected in higher borrowing costs, and Musk will surely need to borrow more money in the next year or two, which is the amount of time that the SEC lawsuit would have been hanging over him had he not settled.

The most galling part of the settlement, for Musk: He has to hire an "experienced securities lawyer" who will vet his tweets and make sure they comply with independent board oversight of his Twitter activity.

The bottom line: Twitter itself never booted Musk off the platform, although there's an argument that it should have. But where Twitter balked, the SEC has now stepped in.

Go deeper

Dominion sends cease and desist letter to My Pillow CEO Mike Lindell

Photo: Stephen Maturen/Getty Images

Dominion Voting Systems on Monday sent a cease and desist letter to My Pillow CEO Mike Lindell over his spread of misinformation related to the 2020 election.

Why it matters: Trump and several of his allies have pushed false conspiracy theories about the company, leading Dominion to take legal action. It's suing pro-Trump lawyer Sydney Powell for defamation and $1.3 billion in damages, and a Dominion employee has sued Trump himself, OANN and Newsmax.

Off the Rails

Episode 5: The secret CIA plan

Photo illustration: Aïda Amer, Sarah Grillo/Axios. Photo: Zach Gibson/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 5: Trump vs. Gina — The president becomes increasingly rash and devises a plan to tamper with the nation's intelligence command.

In his final weeks in office, after losing the election to Joe Biden, President Donald Trump embarked on a vengeful exit strategy that included a hasty and ill-thought-out plan to jam up CIA Director Gina Haspel by firing her top deputy and replacing him with a protege of Republican Congressman Devin Nunes.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Health: CDC director defends agency's response to pandemic — CDC warns highly transmissible coronavirus variant could become dominant in U.S. in March.
  2. Politics: Empire State Building among hundreds to light up in Biden inauguration coronavirus tribute.
  3. Vaccine: Fauci: 100 million doses in 100 days is "absolutely" doable.
  4. Economy: Unemployment filings explode again.
  5. Tech: Kids' screen time sees a big increase.