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Why Tesla Stock Jumped Tuesday

What happened

Shares of electric-car company Tesla (NASDAQ: TSLA) jumped on Tuesday, rising as much as 5.5%. As of 11:10 a.m. EDT, the stock was up 4.1%.

The stock's gain follows a judge's approval of Tesla and CEO Elon Musk's recent settlement with the Securities and Exchange Commission (SEC). The approved settlement is related to the suit the SEC brought against Musk regarding his tweets about considering taking the company private.

Tesla vehicles. Image source: Tesla.

So what

There were concerns about the settlement's approval because, not long after the parties agreed on its terms, Musk mocked the SEC on Twitter, calling the agency the "Shortseller Enrichment Commission." The "name change is so on point!" Musk said. After this tweet, shares took a hit and fell by about 7%.

The judge's approval of the settlement means the terms, which include orders for improved company oversight of Musk's communications, a $20 million fine, Musk's resignation from Tesla's chairman position without eligibility for re-election for three years, and more, represent the final judgment.

Now what

By putting the settlement behind it, Tesla can move past this distraction and focus entirely on business execution. The company is ramping up its important Model 3 vehicle production and is aiming to achieve profitability in the second half of the year. Indeed, Tesla may have already achieved profitability for its recently ended third quarter, but the automaker hasn't reported financial results for the period yet.

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Daniel Sparks owns shares of Tesla. The Motley Fool owns shares of and recommends Tesla and Twitter. The Motley Fool has a disclosure policy.

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