• JPMorgan Chase has agreed to drop its lawsuit against Tesla over a contract breach related to stock warrants.
• The bank had sought $162.2 million in damages, alleging that Tesla CEO Elon Musk's 2018 tweet increased the value of the warrants.
• Tesla countersued JPMorgan, accusing the bank of seeking a "windfall" when it repriced the warrants.
• The resolution of the lawsuit underscores the importance of careful communication by company executives and the potential legal implications of their public statements.

In a significant development in the corporate world, JPMorgan Chase, the U.S. lender, has agreed to drop its lawsuit against Tesla, the electric vehicle manufacturer. The lawsuit, filed in November 2021, accused Tesla of flagrantly breaching a contract related to stock warrants sold to the bank in 2014. The bank sought $162.2 million in damages, alleging that the value of the warrants increased due to a 2018 tweet by Tesla CEO Elon Musk.

Warrants are financial instruments that give the holder the right to purchase a company's stock at a predetermined strike price and date. Musk's tweet on August 7, 2018, suggested that he might take Tesla private at $420 per share, claiming he had funding secured. However, he abandoned the plan 17 days later. These events caused significant volatility in Tesla's share price, leading JPMorgan to adjust the strike price to maintain the same fair market value as before the tweets.

JPMorgan argued that it was obligated to reprice the warrants following Musk's tweet. The bank further claimed that a subsequent ten-fold increase in Tesla's stock price necessitated payments from Tesla, which the company had not made.

The Lawsuit and Counter Lawsuit

In response, Tesla countersued JPMorgan in January 2023, accusing the bank of seeking a windfall when it repriced the warrants. The decision to drop the lawsuit was announced in a one-page court filing by both companies in a Manhattan court, where they agreed to drop their claims against each other. The terms of the settlement were not disclosed in the court filings, and neither company responded immediately to requests for comment.

This lawsuit's resolution is a significant event in the corporate world, given the high-profile nature of the companies and individuals involved. It also highlights the potential legal implications of public statements made by company executives, particularly on social media platforms. Musk, who purchased Twitter for $44 billion in 2022, agreed in a 2018 deal with the U.S. Securities and Exchange Commission to obtain pre-approval from a Tesla lawyer for some of his tweets.

Historical Similar Events

This event is reminiscent of past instances where public statements by company executives have led to legal disputes. For example, in 2018, Elon Musk faced a lawsuit from the U.S. Securities and Exchange Commission over a tweet about taking Tesla private, which resulted in a settlement that included a fine and requirements for oversight of Musk's communications.