Tesla shares fell by more than 8 per cent on Friday morning as worries about an SEC investigation increased and CEO Elon Musk gave the New York Times an interview in which he discussed his mounting problems at the company. Despite everything, Musk says he’s just going to keep tweeting.
Above image: Getty
Isolating exactly which issue at Tesla is making shareholders the most nervous is difficult, but the New York Times interview with Musk, published on Thursday night, doesn’t seem to have done much in the way of softening the electric vehicle company’s PR problems. Musk is described as alternating “between laughter and tears” in the piece, and he insisted that he’s been working 120 hour weeks at the expense of seeing his kids. The report claims that some board members are concerned that Musk “has on occasion used recreational drugs,” and his habit of taking Ambien to help him sleep sometimes leads to late night tweets that cause chaos.
We’ve reached out to Tesla for comment and will update when we hear back.
The most disastrous recent tweet came in the afternoon last week when Musk announced out of nowhere that he is “considering taking Tesla private at $420. Funding secured.” Tesla shares shot up, but it turns out that “funding secured” didn’t necessarily mean, like, you know, that he has the funding secured. In a letter to shareholders, he explained that he left a recent meeting with officials from Saudi Arabia’s sovereign wealth fund feeling confident that a deal to fund the move to a private company “could be closed, and that it was just a matter of getting the process moving.”
Musk feels that being a private company would allow Tesla to think long-term and focus less on quarterly results. It would also eliminate the issue of pesky short-sellers betting against the company and spreading doubts about its potential. He told the Times on Thursday that he expects “at least a few months of extreme torture from the short-sellers, who are desperately pushing a narrative that will possibly result in Tesla’s destruction.” Musk has been known to taunt short-sellers, but he seems to be coming around to feeling a level of respect for their effectiveness. “They’re not dumb guys... they’re smartish,” he said in the interview.
On top of market opponents, Telsa is involved in a nasty lawsuit with a whistleblower who began tweeting out what he claimed to be evidence of wrongdoing at the company on Wednesday. That was followed by accusations that Tesla was spying on other whistleblowers that have legal cases against the company. But above all, the most worrisome issue at the moment might be the fact that the SEC reportedly sent a subpoena to Musk and Tesla’s board this week in relation to his "$420" tweet. An announcement like taking a public company private is typically delivered with detailed plans, and if a company says funding is secured, it should be secured. While he says he has no plans to stop tweeting, he acknowledged that he’s promised not to tweet about going private without approval from the board in the future.
And about that share price that he randomly hit on, he said he wasn’t stoned when he chose the universal number to say it’s time to smoke weed. He just wanted to offer a 20 per cent premium on Tesla’s price at the time, which would have been $419 (£328). He rounded up. “I was not on weed, to be clear,” he said. Gotcha. Wink. Meet us behind the gym after school.
What’s baffling about this storm around Tesla is it was only two weeks ago that a lot the company’s issues seemed to be working out. Its second-quarter results showed it was hitting its production goals and exceeded revenue projections. Musk spoke to analysts in a sedated and respectful manner and apologised for being rude to a couple of them on the previous month’s call. It looked like business was going to get more normal until the restless entrepreneur blew it all up.
All of this prompted Times columnist Kara Swisher to ask: “Is Elon Musk Crazy?” He probably isn’t, but random stories about his personal life don’t help that perception. His real issue is having a bizarre way of setting his priorities. His tunnel-digging Boring Company seems like a big waste of time. He gets in arguments online about socialism. He has an AI company that’s working away in the background. He randomly says he’s going to save kids trapped in a cave when no one needed his help. Amidst all of this, he says he lives at the Tesla factory and misses his kids.
This guy wants to convert the globe to clean energy and colonise Mars. Having a pinball brain is not going to get him there. “The worst is over from a Tesla operational standpoint,” he told the Times. “But from a personal pain standpoint, the worst is yet to come.”