MUSK NOT 1ST CEO TO HAVE TOUGH CALL
Elon Musk says he doesn’t care if day traders sell their Tesla stock. Those words may start to pinch his net worth.
The electric car manufacturer’s stock fell almost 6 percent Thursday after Musk’s contentious conference call with analysts over the company’s first- quarter earnings. The sell- off lopped almost $ 3 billion off Tesla’s market value, and Musk owns 20 percent of the company. The stock bounced back and gained nearly 10 percent Friday.
Musk grew agitated Wednesday when analysts pushed for details on Tesla’s nagging problem of failing to meet car- production targets.
The CEO began his answer by complaining about leaks from inside the company, then pivoted to investors whom he considered wrongly focused on short- term results.
“We have no interest in satisfying the desires of day traders,” Musk said. “I couldn’t care less. Please sell our stock and don’t buy it.” Some investors took his advice. Tesla Inc. is not the first company to suffer a stock sell- off after a testy conference call.
Flying lower
Shares of United Airlines’ parent company plunged 12 percent in October after CEO Oscar Munoz and his lieutenants clashed with analysts who wanted more details about the company’s turnaround plan.
United had beaten market expectations for third- quarter profit, but executives couldn’t explain how they were going to compete against low- fare rivals and refused to discuss future plans.
Or not
On the other hand, shares of Scotts Miracle- Gro Co. barely budged after the lawn- care company’s CEO used profanity to dismiss analysts’ concerns about parts of the business.
“We can’t get you all to shut the f--- up on this issue and so it means we are not publicly communicating properly,” said CEO James Hagedorn on a call in February 2017. Four years earlier, three directors left the compa- ny after a board reprimand of Hagedorn’s language. The CEO apologized for using “inappropriate” words.
Loaded questions
In 2012, shares of Herbalife Nutrition Ltd. tumbled 20 percent in one day after a conference call dominated by tough questions from financier David Einhorn. The hedge fund impresario wanted to know how much of sales came from customers who weren’t part of the company’s network of distributors, and why the company had stopped disclosing certain information.
Einhorn later acknowledged that his Greenlight Capital Inc. had made a profit by “shorting” the stock — borrowing shares and selling them in the hopes of replacing them later after the price drops.
Then there was Enron
One of the most prominent instances of a CEO losing his temper on a call came in 2001 and featured Enron CEO Jeffrey Skilling.
When an analyst complained that the high- flying company didn’t include a balance sheet or cash flow statement with earnings reports, Skilling didn’t hide his contempt.
“Thank you very much,” Skilling replied. “We appreciate that, a-- h---.”
Congress made a federal case out of it. Skilling, chuckling, told lawmakers that if he could do the call over again, “I would not now have used the term that I used.”
Skilling was convicted of securities fraud, conspiracy and insider trading and sent to prison. He is scheduled to be released in February. Enron collapsed into bankruptcy.