Elon Musk’s chummy relations with Wall Street just took a troubling turn
Elon Musk‘s usually chummy relations with Wall Street just took a troubling turn.
During a highly unusual earnings call, Tesla’s chief executive officer cut off analysts and got defensive about probing questions pertaining to the electric-car maker’s finances. The company burned through more than $1 billion for the third time in four quarters.
Musk, 46, said he won’t need to go back to equity or debt markets this year to seek additional funds for Tesla, but crossing Wall Street may be a bad idea. The billionaire wooed investors into buying $1.8 billion worth of bonds in August, which fell within a week. Five months earlier, Tesla sold about $1.25 billion worth of stock and convertible debt.
Here were some of the most head-scratching moments of the call:
Don’t make a federal case
Musk aimed his sharpest words at Toni Sacconaghi of Sanford C. Bernstein, who rates Tesla the equivalent of a hold. After the analyst asked a question about whether the company could reach its 25 percent gross margin target on the Model 3, Chief Financial Officer Deepak Ahuja said recently imposed tariffs, more expensive commodities and higher labor costs factored into the company’s guidance.
“Yeah, but we’re talking about a 3 percent to 5 percent difference, and that’s something that we’ll solve like within three months to six months later,” Musk said. “So don’t make a federal case out of it.”
Boring, Bonehead Questions
Sacconaghi pressed ahead with another query about Tesla lowering its 2018 capital expenditure projection to $3 billion, from $3.4 billion. Ahuja said the carmaker would spend less by simplifying its approach to automation and curtailing infrastructure outlays.
“And so where specifically will you be in terms of capital requirements?” Sacconaghi said.
“Excuse me. Next. Next,” Musk said to the call operator. “Boring, bonehead questions are not cool. Next?”