Shares tank as company is probed on fatal crash
Tesla shares fell to their lowest level in about a year Monday amid broader stock market declines — and after CEO Elon Musk joked Sunday about the car company going bankrupt — before paring some of their losses.
“Despite intense efforts to raise money, including a lastditch mass sale of Easter Eggs, we are sad to report that Tesla has gone completely and totally bankrupt,” said part of Musk’s tweet on April Fool’s Day.
The timing of the joke was curious considering the fresh challenges the company is facing: The National Transportation Safety Board is investigating a fatal Model X crash that has revived concerns about Tesla’s Autopilot technology. Last week, the company recalled 123,000 Model S sedans, while Moody’s downgraded
Tesla’s stock on concerns about the company missing production targets for its new Model 3, plus that it could soon run out of cash and has about $1.2 billion in convertible bonds due by next year.
Tesla usually announces production and delivery numbers a few days after each quarter ends, so the numbers are expected this week. Bloomberg reports that the company’s Fremont plant was “packed with people” Saturday night during the final hours of the first quarter, but that it expects Tesla to fall short of its goal of making 2,500 Model 3 sedans a quarter.
There’s a lot riding on production of the Model 3 — Tesla’s lowest-priced vehicle yet, for which it has 455,000 orders — including the company’s cash flow.
“All their problems would be solved if they could produce in high volumes,” CFRA analyst Efraim Levy said last week in an interview with this publication. “It would produce a huge amount of revenue.”
The Information reported Monday, however, that Musk has taken over “troubled” Model 3 production from Senior Vice President of Engineering Doug Field. The report bugged Musk enough that he took to Twitter to push back, effectively confirming the report.
“Can’t believe you’re even writing about this,” Musk tweeted Monday. “My job as CEO is to focus on what’s most critical, which is currently Model 3 production.” He also said he was “back to sleeping at factory,” a throwback to a couple of years ago when, during the company’s Model X production woes, he told analysts he kept a sleeping bag at the factory.
Meanwhile, the NTSB said Sunday it was “unhappy” that Tesla released details about its investigation into a recent Mountain View crash that killed the driver of a Model X.
“At this time the NTSB needs the assistance of Tesla to decode the data the vehicle recorded,” NTSB spokesman Chris O’Neil said, according to the Washington Post.
When reached Monday, a Tesla spokeswoman said the company would have no comment on the NTSB’s concerns. She noted that Tesla’s blog post last week — in which the company seemed to place part of the blame on a missing or damaged barrier on Highway 101 — was written after reports that the Model X driver, Wei Huang, 38, of San Mateo, had complained to Tesla about Autopilot veering him toward the same barrier he eventually crashed into on March 23.
“We’ve been doing a thorough search of our service records and we cannot find anything suggesting that the customer ever complained to Tesla about the performance of Autopilot,” the Tesla spokeswoman said. “There was a concern raised once about navigation not working correctly, but Autopilot’s performance is unrelated to navigation.”
Amid all of this, what do people make of Musk’s April Fool’s tweets?
“Elon was found passed out against a Tesla Model 3, surrounded by ‘Teslaquilla’ bottles, the tracks of dried tears still visible on his cheeks,” Musk tweeted Sunday.
“While obviously subject to interpretation, it is unlikely Musk would have joked without a high degree of confidence in (Tesla’s) production ramp and financial situation,” Baird analysts wrote in a note to investors Monday.
Social media reaction was mixed, with many Twitter users tweeting “good one, Elon.” Others didn’t find it so funny.
“Amazing that you’d joke about this,” tweeted @markbishopuk. “Especially when insolvency is a very real risk for #TSLA. Arrogant beyond belief, and dismissive of workers’, shareholders’, customers’ and suppliers’ legitimate concerns.”
Shares of the Palo Alto electric-car maker fell as much as 8 percent Monday morning, but ended the trading session down 5.1 percent on the day at $252.48. Tesla shares fell 22 percent in March.