Investor trust in Elon Musk has taken a hit after the U.S. Justice Department yesterday said Tesla's (NASDAQ:TSLA) SolarCity agreed to pay $29.5M to settle allegations that it overstated the costs of its solar installations to receive inflated grant payments, Charley Grant writes in WSJ's Heard On The Street. Solar panels are a fairly small part of TSLA's business but the company's total liabilities exploded to nearly $20B after last year's SolarCity acquisition, which was approved by investors despite Musk's conflicts as the solar firm's chairman and largest shareholder. In any case, payments from the government grant program at the center of the allegations will decline in coming years: The investment tax credit is worth 30% of qualifying solar costs through 2019, but in 2022 it falls to 10% for commercial systems and zero for residential systems. TSLA is up 67% YTD "because investors believe fully in Musk’s vision and ignore the fragility of the balance sheet. That trust took a $30M dent with [the] settlement, and investors should wonder what could be in store for the stock if confidence in Musk were to waver even slightly," Grant writes.

Source: Wall Street Journal September 23, 2017 12:22 UTC