To lose one major money person from your company may be regarded as a misfortune; to lose two within a week looks like carelessness. You don’t need to be good at numbers to figure out that’s not exactly stellar optics.
that chief accounting officer David Morton quit Tesla on Friday — after about a month in the gig — because he felt Musk wasn’t taking his advice on the go-private thing. (The previous head of accounting left in March.) Michael Hiltzik at the Los Angeles Times
says “it’s conceivable that he saw something in the books that scared the hell out of him.”
Then, on Wednesday, Bloomberg reported
the departure of Justin McAnear, Tesla’s vice president of worldwide finance. McAnear is leaving to take a CFO gig at an as-yet-unnamed company. And those are just the money folks! Tesla’s HR chief, Gabrielle Toledano, ankled the company on the same day as Morton, as did the company’s VP of communications. Thirty-ish other executives have left the company since June
And amid all this turnover, what is Elon Musk doing? Last Friday, I’d just come out of Glacier National Park and hit Browning, Montana, when I got the first cell service I’d had in a couple of days. I opened Twitter. And the first thing I saw was a GIF of Elon Musk smoking a blunt. I am going to summarize the takes in the form of the chorus of The Talking Heads’ “Slippery People
We’re going to move right now — turn like a wheel inside a wheel
— to a discussion of why the pot-smoking dominated the news cycle around this podcast. There were a number of other interesting things
discussed! Musk teased a flying vehicle design he doesn’t plan (yet) to pursue and suggested serious Neuralink news is forthcoming. So why are people focused on the blunt?
I have a guess about why the blunt lit up the net, and it has to do with symbolism. The CEO is the human face of a sprawling abstract organization. Generally, CEOs try to project discipline, calm, and a sense that no matter what conflicts are happening internally, it’s all under control; Tim Cook gave us a perfect example this week. The Apple event that he served as hypeman for was an almost painfully controlled presentation, and it sent the message that the company is shipshape.
Apple doesn’t have Tesla’s baggage. It doesn’t need to signal all is under control in order to reassure anyone. But it’s the kind of signaling that tends to reassure investors and the public. So after all these wild tweets, high-level departures, and manufacturing hiccups, you might expect Musk to project that he’s got a steady hand on the wheel. Instead, he poured a whiskey and hit a blunt.
I’m focusing on Apple in part because Tesla followers make the comparison themselves. “The only comparable to Tesla’s brand recognition is Apple, in our view,” wrote Nomura Instinet analyst Romit Shah in a research note this week. Shah specifically cited Musk’s “erratic behavior” as a risk to Tesla, suggesting Musk’s antics distract from Tesla the company. The note features charts of Musk’s Twitter activity by month, as well as a timeline of recent Musk controversies, to drive home Shah’s point.
While Shah has faith in Tesla as a company (“Tesla is positioned to deliver unprecedented revenue growth and accrue substantial profits,” he said), he also thinks the company needs “better leadership.”
Shah’s not alone. Baillie Gifford, Tesla’s biggest institutional investor, says it spoke to the SEC about the abandoned “go private” plan Musk floated last month. And asset manager James Anderson told Reuters
that Musk “needs help, and I mean that psychologically as much as practically.” Cool down, stop acting crazy
Now, Musk’s off-the-cuff handling of most public appearances has served him well with his fan base; it gives him a kind of authenticity that Cook lacks. The loose, whiskey-and-weed performance is the kind of thing that a lot of Musk’s fans connect to — especially on YouTube
Most people don’t have time to dig into Tesla’s financials, even if they are financially literate enough to understand them. And I can’t speak for anyone but me, but I don’t look at the health of a company before I buy a consumer product. Most consumers, instead, follow sentiment. Lately, that sentiment hasn’t been great: Tesla’s cars are being delivered with flaws
; customer service has been a “nightmare”
; and just this week, Tesla scaled back on the colors it’s offering
for the Model 3. Oh, right, and also there’s an embarrassing thing
about a Tesla crashing itself by backing out of a garage using its Summon feature? What’s more, Tesla is about $10 billion in debt
, hasn’t yet had a yearly profit, and is losing a lot of senior talent.
Tesla doesn’t advertise, so it’s dependent on Musk’s “earned media” (that’s the technical name for it!) appearances to help establish sentiment. And now that there are real concerns about the long-term stability of the company, it’s a little weird to see the CEO sipping whiskey and smoking weed like he doesn’t have a care in the world. It’s not exactly the kind of sentiment anyone who’s feeling skittish about Tesla’s future is going to appreciate.
An awful lot of shareholders seem to believe chaos is a ladder for Tesla’s ultimate success since Tesla’s stock is up this week after falling last Friday. But even their confidence may be slipping: options data suggests that owning Tesla shares is “is close to the riskiest it has ever been,” according to Reuters
. That’s not all. The price on Tesla’s junk bonds also slid to about 85 cents on the dollar last week, according to MarketWatch
This will all seem familiar to longtime Muskwatchers who have been navigating public sentiment that feels, at times, like a very strange roller coaster ride. Musk isn’t going anywhere. Even if the board wanted to eject him, I suspect you’d have to drag him out kicking and screaming, leaving claw marks across his desk. There’s a lot of noise but no real indication that anything is going to change anytime soon.
Eventually, either Tesla will slide into profitability, as Musk has suggested we should expect this year, or the market will lose patience. But this week in Elon feels a little like groundhog day: another week of shouting with no obvious outcome. Turn like a wheel inside a wheel.