Tesla rocked by latest exec shakeup, Musk's behavior on webcast




FILE PHOTO: Tesla Chief Executive Musk attends a forum on startups in Hong Kong
FILE PHOTO: Tesla Chief Executive Musk attends a forum on startups in Hong Kong  

By Vibhuti Sharma and Arjun Panchadar

(Reuters) - Tesla Inc Chief Executive Elon Musk was filmed smoking marijuana, drinking whiskey and wielding a sword just hours before the automaker said its accounting chief would leave after a one-month stint, the latest in a string of unusual behavior and executive departures that have stunned investors.

Shares of the electric carmaker tumbled as much as 10 percent on Friday, with investors on edge after a tumultuous August during which Musk proposed and then abruptly pulled the plug on a go-private deal.

Chief Accounting Officer Dave Morton resigned because of discomfort with the attention on the company and pace of work during that time, Tesla said in a filing on Friday.

Morton, whose departure comes after the U.S. Securities and Exchange Commission opened an inquiry into Musk's aborted plan, joins a list of executives who have left Tesla recently.

Bloomberg reported on Friday that Chief People Officer Gaby Toledano would not return from a leave of absence just over a year after joining.

"Since I joined Tesla on August 6th, the level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations. As a result, this caused me to reconsider my future," Morton said in the filing.

Late on Thursday, Musk was filmed drinking whiskey, briefly smoking marijuana and wielding a Samurai sword during a 2-1/2-hour live Web show with comedian Joe Rogan that swiftly spread across Instagram and other social media.

Taking a puff from a joint, which Rogan said was a blend of tobacco and marijuana and legal in California, Musk said he "almost never" smoked.

"I'm not a regular smoker of weed," Musk said. "I don't actually notice any effect ... I don't find that it is very good for productivity."

It was the latest in a string of unconventional behavior by the billionaire South African native who is also CEO of rocket startup SpaceX.

Even before Musk's surprise Aug. 7 tweet that he had funding "secured" for a go-private deal, Tesla had been under scrutiny from investors, analysts and short-sellers as it works to hit production targets and slow its cash burn.

Morton, who is walking away from a $350,000 base salary and a $10 million new-hire stock grant that would vest over four years, said he believes "strongly" in Tesla and that he had no disagreements with the company's leadership or its financial reporting.


Analysts on Friday reiterated their call for Tesla to bring in another senior leader as it strives to expand production and potentially raise more capital. Musk has said he expects the company could turn profitable in the second half of this year.

"We have been calling for a co-CEO or COO to assist to codifying the leadership structure and in so doing, the culture at Tesla," said James Albertine, analyst at brokerage Consumer Edge.


"We think this is further evidence that the time is now for management and the board to address these issues."


SOBERING EFFECT ON INVESTORS Tesla's $1.8 billion junk bond maturing in August 2025 plunged as much as 4 cents on the dollar to below 82 cents, a record low, in Friday trading, pushing the yield above 8.8 percent.

Coupled with an upfront cost of 21 percent of insured value, it now costs an investor around $280,000 to insure $1 million of Tesla debt for a year.

With Tesla's stock falling to its lowest level since April, short sellers added 810,000 shares to their positions, bringing the total as of Thursday to about 32.6 million shares, according to S3 Partners, a financial technology and analytics firm.

Tesla has told investors it expects to turn a profit in the second half of this year, a forecast the company's head of investor relations, Martin Viecha, reiterated at a conference earlier this week sponsored by RBC Capital Markets, RBC analyst Joseph Spak wrote in a note on Thursday.

Viecha also restated Tesla's forecast that it will build 50,000 to 55,000 of its Model 3 sedans in the current quarter, and indicated the company's working capital will improve as production increases, Spak wrote.

Prominent short-seller Andrew Left has sued Tesla and Musk, saying in his proposed class-action complaint on Thursday that Musk's issuance of materially false and misleading information related to his abandoned plan harmed both short-sellers and those hoping the stock would rise.

Tesla shares were last down 7 percent at $261.37 on Friday afternoon. The price of Tesla's junk bond also sank and the cost to insure the debt soared.



(Reporting by Nivedita Balu and Ismail Shakil in Bengaluru, additional reporting by Noel Randewich in San Francisco, Joe White in Detroit and Dan Burns in New York; Writing by Meredith Mazzilli; Editing by Bernard Orr and Matthew Lewis)

COMMENTS

More Related News

Tesla cuts jobs as it looks to make Model 3 more affordable
Tesla cuts jobs as it looks to make Model 3 more affordable

The company, which has struggled to achieve long-term profitability and keep a tight lid on expenses, also said it expects fourth-quarter profit to be lower than the preceding quarter. Chief Executive Officer Elon Musk said the need for lower-priced versions of Model 3 will become even greater from July, when the U.S. tax credit again drops in half, adding $1,875 to the car's price tag, and again at the end of the year when it goes away entirely. The phase-out of the electric vehicle tax break confronts Tesla with the choice of raising prices at the risk of losing customers or slashing costs by thousands of dollars per vehicle, a herculean task for an automaker.

Tesla Is Cutting 3150 Jobs to Increase Model 3 Production
Tesla Is Cutting 3150 Jobs to Increase Model 3 Production

Elon Musk told employees about the cuts in a letter posted online.

Tesla to cut workforce by 7 percent, increase Model 3 production at lower prices
Tesla to cut workforce by 7 percent, increase Model 3 production at lower prices

Saying the road ahead was "very difficult," Tesla's CEO Elon Musk said Friday that the company would be cutting its staff by about 7 percent.

Elon Musk
Elon Musk's 'incredibly expensive' tunneling plans unrealistic, says Uber

Elon Musk's plans for underground tunnels to solve congestion in cities are unrealistic because they are too expensive to dig, Uber has said. Speaking about its "flying car" project, the company's aviation engineering director, Mark Moore, said the Boring Company tunnels pioneered by the entrepreneur were "one of the most expensive things you can do". "It's a great thing if he can do it. The cost is really what he's up against. It really is incredibly expensive to dig holes under the ground," Mr Moore said.  Both Uber and the Boring Company are proposing different ways to tackle cities' significant transport problems, and are both launching projects in Los Angeles, one of America's...

Tesla to cut workforce by 7 percent, sees smaller fourth-quarter profit
Tesla to cut workforce by 7 percent, sees smaller fourth-quarter profit

The company has long struggled with cash burn and Chief Executive Officer Elon Musk has been under intense pressure to stabilize production of the Model 3, seen critical for easing a cash crunch and achieving long-term profitability. "I want to make sure that you know all the facts and figures and understand that the road ahead is very difficult," Musk said in an email to employees that was published on the company's blog. This is Tesla's second job cut in seven months and comes just days after it cut U.S. prices for all vehicles and fell short on quarterly deliveries of its mass-market Model 3 sedan.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Economy

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.