Categories Earnings

Is the Tesla stock sell-off a call for Musk to tone down?

“These questions are so dry. They’re killing me…” That was Tesla (TSLA) chief Elon Musk’s response when confronted by investors’ questions at the company’s much-talked-about Q1 earnings call this week. Obviously, Wall Street was not amused by Musk’s candid comments about the analysts who participated in the conference. The result — Tesla stock nosedived in the aftermarket, paring most of its recent gains.

What started as a typical conference call turned into a verbal slugfest towards the end, with Musk scoring with his harsh references like “boring” and “bonehead”. Some of the analysts were apparently taken aback by the strange manner in which their questions were treated by Musk, who had earlier sounded confident about the prospects of Tesla turning profitable in the near term.

Picture Courtesy: SpaceX

The general perception is that Musk’s unconventional approach to the queries of analysts, who represents the leading banks, was unbecoming of an entrepreneur who is yet to become successful in financial terms and one who depends heavily on banks to take forward his ambitions projects, mainly in the aerospace and electric vehicle segments.

During the call, he was particularly irked by questions about delays in the production of Model 3 and Tesla’s capital requirements and refused to answer the questions. Musk has enough reasons to evade questions on capital, for the company’s negative cash flow stayed above the $1-billion mark for three consecutive quarters, despite repeated assurances of a turnaround.

On the Model 3 front, Tesla is facing customers’ ire for not meeting production targets, causing a delay in deliveries. And, Musk has not been able to come up with a tangible solution to pacify those who have paid for the car and waiting for long to get delivery.

A day before the earnings release, Tesla agreed to partially reimburse customers who filed a class-action lawsuit for not providing some of the features the company had promised while selling its cars equipped with Enhanced Autopilot.

During the call, Musk was irked by questions about delays in the production of Model 3 and Tesla’s capital requirements

Meanwhile, Musk reassured investors and customers that production of Model 3, the company’s first passenger vehicle meant for large-scale manufacturing, is on track. He also exuded confidence that the company would turn profitable in the third quarter. Ironically, the projection came the day when the company reported its biggest ever quarterly loss.

Tesla’s unadjusted net loss widened to $784.6 million, or $4.19 per share, in the first quarter from $397.2 million, or $2.04 per share, a year earlier. Meanwhile, revenues climbed 26% to $3.4 billion, exceeding expectations.

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