It’s been a weird half-week for Tesla CEO Elon Musk.
It began on Wednesday with good news. Tesla reported its third consecutive quarterly net profit, a first for the chronically money-losing company.
True, the net was only $16 million and resulted from selling clean-air credits to other carmakers, not electric vehicles to its own customers. But still.
Sales and revenue were up for the quarter in spite of the coronavirus crisis. One reason is that Tesla’s home plant in California didn’t heed pandemic shutdown orders until the last week of March.
The unexpectedly positive first-quarter financial stats pushed Tesla’s stock price up 9%, or nearly $66, to $866 overnight. It was a happy picture.
But then Musk fired up his infamous Twitter account. In a flurry of tweets—including one in which he announced he is selling his house and most of his possessions—Musk opined that “Tesla stock is too high.”
Talk about a self-fulfilling prophecy. Tesla’s share price promptly headed south, skidding 19% in two days to close the week at $701. The slide erased $14 billion from Tesla’s market value—and $3 billion from Musk’s own stake in the company.
The drop also threatens to upend the huge bonuses Musk stands to collect if Tesla’s market cap averages more than $100 billion. It’s above that level now, but antics like this surely won’t help it stay there.
Same Ol’ Musk
This isn’t the first time Musk has triggered a precipitous swing in Tesla’s share price. He did it in 2018 over his deep annoyance at the company’s short-sellers.
In a nine-word tweet, Musk revealed that he was thinking of taking Tesla private (at $420 per share) and had arranged the funding to do it. That wasn’t quite true, and he quickly walked back the comment.
But it was too late.
The tweet triggered a surge in the stock, then at $343 per share. Investors felt misled. The Securities and Exchange Commission was not amused by Musk’s cavalier approach to the fiduciary duties of head of a publicly-traded company and filed a lawsuit to throw him out of the company.
Two months and $40 million in fines later, Musk agreed to step down as chairman for two years and allow a special in-house committee to monitor his tweets.
Five days after the settlement, an obviously unrepentant Musk taunted the SEC, describing it in an unfiltered tweet as the “Shortseller Enrichment Commission.”
What does this week’s interlude mean? Probably not much in the long term. Tesla under Musk has had a profound and transformative impact on the auto industry in spite of its leader’s unconventional style.
It’s the fifth generation of a vehicle that has been increasing in sales year after year since its introduction in 1997.
According to Sandor Piszar, Chevrolet truck marketing director, “We engineer and build our trucks with customers’ expectations in mind.”
Dan Nicholson is vice president of General Motors Global Propulsion Systems, the organization that had been “GM Powertrain” for 24 years.