Tesla Inc.'s (TSLA) stock took a hit on Wednesday, plummeting 5.02% in the pre-market session. The sell-off came amid reports that the company's CEO, Elon Musk, and his aerospace firm SpaceX are facing multiple federal reviews over potential violations of security reporting rules.
According to news reports, federal agencies have opened at least three reviews into whether Musk and SpaceX complied with disclosure protocols intended to protect state secrets. There are concerns that Musk may have failed to report some details of his meetings with foreign leaders and travel plans, as well as his use of drugs, which is required even with a prescription.
The revelations have raised questions about Musk's ability to handle classified information, given his top-secret security clearance at SpaceX, which is a major defense contractor. Some officials have expressed concern that Musk could inadvertently share sensitive data with others, and the Air Force has reportedly denied him a high-level security access known as the Special Access Program status.
However, the negative news was offset by reports that Tesla's stock has been on a powerful rally, especially after the election victory of President-elect Donald Trump. Musk, an ardent supporter of Trump, has been named to help lead an effort to winnow the federal bureaucracy, and analysts believe that loosening autonomous driving rules from the incoming Trump administration will benefit Tesla.
Despite the potential rebate cuts under a Trump presidency, analysts remain bullish on Tesla, citing the company's cost efficiency, unmatched scale, and progress in the autonomous vehicle domain, including plans to launch robotaxi services in 2025. The stock has gained more than 90% since Trump's election, with Wall Street seeing Musk's relationship with the President-elect as a positive for the electric-vehicle maker.