Dow Jones futures fell modestly Friday morning, along with S&P 500 futures and Nasdaq futures, as Italian budget fears hit Europe. Tesla stock crashed as the SEC sued Tesla (TSLA) CEO Elon Musk for fraud over his go-private bid. Progress Software (PRGS) sold off on mixed results and weak guidance. Marijuana stocks Tilray (TLRY) and India Globalization Capital (IGC) continued to climb after big gains Thursday.
Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures dipped 0.2%. Nasdaq 100 futures lost 0.3%.
The euro fell sharply Friday morning as traders dumped Italian stocks and bonds. Italy’s main stock index retreated 3.8%. The left- and right-wing populist coalition government decided to hike its budget deficit beyond European Union limits, setting up a standoff with Brussels. Stocks also retreated in Germany, France and the U.K.
Remember that Dow futures, Tesla stock and other overnight action don’t necessarily translate into actual trading in the next regular session.
The SEC sued Tesla CEO Elon Musk for fraud, claiming he was reckless with his go-private, “funding secured” tweets. The financial watchdog agency spelled out how Musk had not secured funding of any kind. The SEC wants to bar Elon Musk from serving as an officer or director of any public company.
That would force Musk out at Tesla, and complicate any effort to take SpaceX public.
Tesla stock plunged 13% to 268.15 in premarket trading in Friday’s stock market trading. Shares hit a recent intraday low of 252.25, set on Sept. 7.
Elon Musk, in a statement, rejected the SEC claims. Tesla and the SEC had been on the verge of a settlement, but Musk rejected it at the last minute according to reports.
The SEC suit will certainly bolster shareholder lawsuits against Tesla and Musk, given the stock’s wild surge and plunge following the “funding secured” tweet. The Justice Department reportedly is conducting a criminal probe.
Tesla’s board, never seen as particularly independent or active, will come under more pressure. Tesla critics and even many supporters have long urged the company to hire a No. 2 to run Tesla’s day-to-day operations and get its manufacturing in order. Now the need is greater, in case the SEC suit leads to Musk’s departure.
Tesla will report third-quarter production and delivery members next week.
Many analysts say Tesla will need to raise cash in the near future. But the SEC suit and the possibility that Musk will eventually be gone could create real hurdles to raise capital.
Progress Software earnings topped views, but Q3 revenue was lighter than expected. The software company also gave weak Q4 guidance. Progress Software stock fell 14% late. It’s been consolidating for the past eight months, with a declining relative strength line.
Recent marijuana IPO Tilray’s stock shot up 8% early Friday after surging nearly 15% to 131.30 Thursday. Tilray hit 300 intraday last week before crashing.
India Globalization Capital stock vaulted 16% in the premarket after closing 52% higher. India Globalization Capital recently announced plans to sell drinks infused with cannabidiol, a nonpsychoactive compound in cannabis that relieves pain but does not get the user high.
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