Tesla slammed after Elon Musk spurns "not cool" questions
Investors continue to hammer Tesla, a day after founder Elon Musk dumbfounded some on Wall Street by cutting off what the billionaire called "boring, bonehead" questions about the electric car maker's finances during a conference call with stock analysts.
Little changed after Tesla reported its largest-ever quarterly loss, but Tesla stock hit the skids during the post-earnings-announcement call late Wednesday with analysts. As the iconoclastic chief executive dismissed questions and rebuked analysts, the company lost more than $2 billion in market capitalization.
The decline persisted on Thursday as Wall Street weighed in on what's ahead for Tesla and Musk, who ridiculed bank analysts when probed on how Tesla could produce more Model 3 sedans and generate cash in the latter half of the year. Shares were trading around $280, down from Wednesday's closing price of $301.15.
Analysts have expressed increased worries that Tesla may need to raise more funds in 2018 so it doesn't run out of capital, and have been looking for evidence that Tesla can maintain production targets of 5,000 vehicles a week.
Hearing those concerns, Musk's performance proved less than soothing.
Musk, who shot down Sanford Bernstein's Toni Sacconaghi for "boring bonehead questions" that are "not cool," said he would not need to return to the equity or debt markets this year to request more funds for Tesla, despite burning through $1.1 billion in cash in the first quarter.
Barclays analysts Brian Johnson and Dan Levy question the sustainability of Tesla's Model 3 production, a scenario they argue will keep the company pressed on cash. "Yet Tesla needs to keep the narrative positive, as its options for any capital raise will likely be limited if it is raising [more money]] out of a position of weakness," they noted.
UBS analysts Colin Langan and Gene Vladimirov wrote: "We remain cautious given the cash burn, the volatile and uncertain production timeline and initial quality concerns."
Robert W. Baird's Benjamin Kallo's suggestion that Tesla offer more Model 3 updates to help boost its stock price was met with a blunt response. "I think if people are concerned about volatility, the should definitely not buy our stock," Musk replied. "I'm not here to convince you to buy our stock. Do not buy it if volatility is scary. There you go."
Kallo, for one, is taking the contentiousness in stride, calling the theatrics "noise" that overshadows what he views as solid results and evidence that Tesla "is successfully ramping Model 3 vehicle and battery production."
While Musk refused to answer questions "he deemed mundane," Kallo believes the hit to Tesla stock is a blip. "We believe this is a short-term impact, and expect shares will trade higher on the solid first-quarter results after the dust settles."
Musk's tone on the call illustrates the pressure for the Model 3 to succeed if Tesla is to continue as a company, Jessica Caldwell, executive director of industry analysis at Edmunds, told CBS MoneyWatch. "There was a sense of the realization of being in the thick of production hell with the Model 3, and trying to get these numbers up, otherwise the company is not going to make money, essentially," she said.