Tesla’s Shares Continue to Stumble as Executives Quit and Elon Musk Smokes Pot on Webcast
As if Tesla’s CEO Elon Musk’s admission in an explosive interview in NYT about him taking pills to sleep and the uncertain deal to privatize his company isn’t enough, Musk was filmed smoking pot and wielding a sword on a webcast.
This, after he announced the departure of his recently appointed accounting chief. Musk’s erratic behavior and the sudden rise of executives quitting left the investors stunned and uncertain of the future of the giant electric carmaker company, Tesla.
The Impending Downfall
Tesla stocks and shares plummeted more than 6% on Friday at $263.24, leaving investors on edge after the explosive interview of Musk in August in which the CEO proposed the privatization of the company, only to find out the Saudi Arabian government hasn’t committed to funding Tesla’s privatization yet. Aside from that, many investors were wary of the CEO’s health condition after Musk confessed how he uses drugs to make himself sleep at night.
They couldn’t help but be suspicious whether or not Musk’s proposed privatization was just a product of his hallucination. Just a month after Tesla was plunged into a series of controversies, the Chief Accounting Officer Dave Morton filed his resignation last Friday due to his discomfort with the attention and scrutiny the company received from the public.
He also confessed he couldn’t keep up with the pace of work after joining the company for a month. Meanwhile, the Chief People Officer Gaby Toledano also confessed he wouldn’t return from his leave of absence after a year of joining the company.
Later on Friday, the company appointed a new president of automotive operations named Jerome Guillen to oversee the management, and he’ll be reporting to Musk directly. The said move gave Musk an expert on the auto industry to lean on at crucial times like this. Despite the company’s attempt to cope up, the shares barely moved even after the promotions were announced.
Musk’s Strange Behaviors
Morton and Toledano were just one of the few Tesla executives who quit from the company after the U.S. Securities and Exchange Commission conducted an investigation on Musk’s proposed privatization plan. And it seems the controversies around Tesla have yet to subside. Just last week, Musk was filmed drinking his whiskey while smoking marijuana and wielding a Samurai sword during his live webcast show with comedian Joe Rogan.
Rogan also said that the smoking pot Musk took was a mixture of tobacco and marijuana, which was legal in California. Musk then admitted that he almost never smoked, not to mention he didn’t smoke weed since he claimed it wasn’t good for his productivity. However, the investors left confused since his statements and recent acts seemed in contradiction.
The Numbing Effect on Investors
Ever since the controversy started, Tesla’s $1.8 billion junk bond plummeted to 4 cents on the dollar below 82 cents. Coupled with the required 21% of the insured value upfront cost, a Tesla investor should have at least $280,000 to insure $1 million of Tesla’s debt for a year. Since Tesla’s stocks hit its lowest level last April, most of the companies short sellers added more than 810,000 shares to their positions, bringing in a total of 32.6 million shares in the company according to S3 Partners.
One of Tesla’s prominent short-sellers, Andrew Left, sued Musk and his company for issuing false and misleading information related to Musk’ abandoned plan. The said plan harmed not only the short-sellers but also those investors hoping the Tesla stocks would rise.
Despite Tesla’s plummeting performance, the head of investor relations Martine Viecha reiterates the company expects to reverse the trend and make a profit in the second half of 2018. He also restates the company’s forecast to build around 50,000-55,000 Model 3 sedans for the current quarter, indicating that Tesla’s working capital will also improve as their production increases.
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