10-Bowl Rating
Tesla CEO Elon Musk’s performance on Wednesday’s earnings call was bizarre and contentious. Musk attacked after everyone. After hours, shares of Tesla took a hit: Elon Musk acted like a jerk, and Tesla stock paid the price.
Tesla Inc. Chief Executive Elon Musk held a long, odd earnings conference call Wednesday in which he insulted analysts, the media, federal regulators and people who died behind the wheel of his cars, and then told anyone concerned about volatility not to invest in his company.
Unsurprisingly, volatility ensued, as Tesla (TSLA) shares dropped quickly during an increasingly bizarre call with the very analysts and media whom Musk attacked.
Tesla on Wednesday disclosed the largest quarterly loss in the history of a company known far and wide for losing vast sums of money, with a net loss of almost $785 million. The numbers still managed to beat expectations that have been repeatedly lowered for more than a year, which led Musk to take a victory lap on Twitter after losing more than three quarters of a billion dollars in three months.
It only got weirder from there. In his conference-call introduction, Musk confused per-week and per-day production figures, described a “super complicated” robot Tesla designed and built before realizing it could not perform its unnecessary function, then mentioned offhandedly that he planned to restructure the company this month — a disclosure he never revisited to provide more information.
When the question-and-answer session started, Musk turned vitriolic, and not even his fellow executives were safe. After Chief Financial Officer Deepak Ahuja referred to Tesla as “best in class” for batteries while responding to an analyst query, he was interrupted by Musk.
“The best. It is not a class,” Musk interjected. “Yes, we’re the best. Sorry,” Ahuja replied. “The best in a class of one,” Musk made sure to point out.
Soon, Musk turned his ire toward the financial analysts who were asking the questions. When Bernstein analyst Toni Sacconaghi attempted to ask about capital-expenditure spending and the money needed, Musk cut him off by yelling “Next!” When RBC Capital Markets analyst Joseph Spak then asked how many people with Model 3 reservations were actually taking delivery of their cars, Musk declined to answer any more “boring,” “dry” questions. “You’re killing me,” he said.
By the time Baird analyst Ben Kallo took the phone more than an hour into the call, the apprehension was thick. Kallo took more time with an introduction to his question, which gave reasoning for why Musk should answer it and not be angry at him, than actually asking the question. Musk did not really answer his question, instead complaining about leaks to the media and his own investors.
Wow
There’s very little I can add to what’s already been said. So let’s take a look at what has been said.
Cartoon of the Day
FerroTV
https://twitter.com/FerroTV/status/991810676007022592
Mark B. Spiegel-markbspiegel
On a GAAP basis $TSLA lost an average of $23,654 per car delivered in Q1. If we exclude the $50M in ZEV credits, it lost an average of $25,321 per car…
“Great business, guys!”$TSLAQ$TSLA— Mark B. Spiegel (@markbspiegel) May 2, 2018
Rudolf E. Havenstein-RudyHavenstein
“This quarter, Tesla’s net losses were a record $784.6 million ($4.19 per share). So, while it’s revenue was higher than ever before, it also reported record losses.” https://t.co/7f9zeuGQcO
The old “lose money on every sale, but make it up in volume” thing. pic.twitter.com/dPpGgKqVMW
— Rudy Havenstein, Senior Markets Commentator. (@RudyHavenstein) May 3, 2018
Escaping Alpha-escapingalpha
Tom Randall-tsrandall
Here’s the exchange where Elon Musk cut off two analysts on the Q1 earnings call to go to crowd-sourced questions on YouTube. Shares fell 4.7%, or about $2.4 billion, in after-hours trading pic.twitter.com/uBP4UtaYAW
— Tom Randall (@tsrandall) May 2, 2018
Is This Guy from an Alternate Universe?
These are exactly the Tesla numbers I was hoping for. Shorts have no thesis now. Game over. Conference call at 2:30 PM where Elon lays it all out. $TSLA #Model3
— Ross Gerber (@GerberKawasaki) May 2, 2018
Tesla Tweet of the Day-TalesFromTheFuture-talesftf
That Tweet precisely epitomizes my 10-bowl popcorn rating.
Mike “Mish” Shedlock
This is Amber Heard’s fault as Musk’s behavior clearly is the result of an untreated syphilitic infection.
I agree with Musk, stay away and stop asking all those boring questions. I also agree on the volatility issue…stay away until it settles down. Post-chapter, this could be a nice little $5.00 stock, assuming the bankruptcy judge owns a Model S.
A company to consider in battery production is Ionic Materials……privately held by venture capitalists…….extremely interesting technology that solves the explosive flammability issues that plague lithium-ion batteries.
Just another example of the Fleecing of America…
Despite this train wreck, I still see headlines such as this one presented on MarketWatch, “Look past the Tesla noise and buy shares cheap while you can: Baird” Morgan Stanley’s analyst still maintains a $376 price target. While everyone talked about the bizarre conference call, it doesn’t look like there were many (if any) changes to analyst recommendations or target prices. The “cult” following still seems to be firmly entrenched.
Tesla is in it’s own class. No properly run company would have attempted what they did simply because the numbers didn’t add up. Now that electric car production costs have come down, other car companies will swoop in and start producing competitive cars in Tesla’s space. If Tesla couldn’t succeed when they basically had a monopoly on high end electric vehicles, what’s going to happen when every car company is offering electric SUVs, pickups, luxury sedans, etc… ? They’re toast.
Bitcoin investment looks better than ever if you compare it to owning Tesla shares.
This is the common story of Silicon Valley high-flyers focusing on consumers (B2C, not B2B)… Facebook, Uber – anyone?
Grow at any cost, until the real cost becomes apparent to everyone else. Then the charismatic founder leaves (after pocketing a very healthy sum), an experienced team (read adults) is put in place, who patiently works through boring items like profitability… The only question is how long it takes?
PS: The founder goes out to repeat the formula somewhere else. Rinse and repeat.
Butterfly wings calling a turn over of the market?
The Board seriously needs to address the high probability of Elon Musk’s mental illness getting in the way of his ‘leadership’ of the company and its relationships with the owners of the business.