Tesla is Imploding as CEO has Tantrum
Tesla shares stumbled Monday as chief executive Elon Musk faced criticism over a public spat with a British diver who worked on the Thai soccer team rescue.
Shares of the electric car maker were down 3.5 percent in late-morning trading at $307.82 on news that Musk could face a libel suit over the episode.
Musk attacked British diver Vern Unsworth, who had dismissed the Tesla chief’s efforts to help the rescue mission for the 12 boys as a “PR stunt” in a widely seen interview on CNN.
Musk, without providing any justification or explanation, referred to Unsworth as “pedo guy” in a since-deleted tweet on Sunday. “Pedo” is short for pedophile.
Unsworth told AFP on Monday he had not reviewed the tweets in full and had only heard about them.
But asked if he would take legal action against Musk over the allegation, Unsworth said: “If it’s what I think it is yes.”
Unsworth, who lives part of the year in Thailand, took part in the gargantuan 18-day effort to retrieve the 12 boys and their coach, a mission that ended on July 10 when the last five members were extracted.
Unsworth had dismissed an offer from Musk for a miniature submarine as useless to the mission.
The episode is the latest controversy surrounding Musk, who has occasionally rattled Wall Street with erratic behavior.
Shares were pummeled in May after Musk abruptly cut off questions from Wall Street analysts over Tesla’s spending plans.
But Musk also has many champions on Wall Street, who believe his plans for disrupting autos could remake the transportation sector and have helped Tesla achieve a market value greater than Ford and only slightly below that of General Motors.
Elon Musk has had a series of angry social media dust-ups with Wall Street analysts, journalists, employees and others.
But his latest outburst on Twitter attacking a British rescue worker in Thailand has raised fresh concerns over the star tech entrepreneur’s stability and leadership abilities.
Musk, the South African-born innovator and billionaire behind Tesla and SpaceX, found himself in hot water after insulting Vern Unsworth, a British diver who worked on the Thai soccer team rescue and who dismissed Musk’s plan to recover the trapped group.
The since-deleted weekend tweet referred to Unsworth as “pedo guy,” an apparent reference to pedophilia, faced a deluge of criticism on social media and from analysts questioning whether Musk had crossed a line on responsible conduct for a CEO.
“This is the most brand-damaging thing Elon Musk has ever done,” said Roger Kay, analyst with Endpoint Technologies Associates who follows the technology sector.
Kay said Musk appeared to be following in the footsteps of President Donald Trump in using Twitter to vent frustration and insult anyone with whom he disagrees.
“It’s totally gratuitous. It wasn’t necessary,” Kay said of the Musk insult to the Briton, who has threatened a lawsuit. “It makes him very Trump-like.”
Tesla shares skidded 2.75 percent to close at $310.10 following the latest controversy, adding to pressure on the electric automaker which has struggled to meet production targets for its Model 3, seen as crucial to its long-term viability.
– Pressure fractures –
Musk “is under a lot of pressure and we’re seeing pressure fractures,” Kay said.
“He’s been sleeping in his factories trying to get production up and that’s been difficult. But when he talks to investors, he has to reassure them that all that money isn’t going to fall on the floor.”
Musk has cultivated reputation as a creative genius, with some comparisons to another technology star known for being erratic, the late Apple-co-founder Steve Jobs.
Patrick Moorhead, analyst and consultant with Moor Insights & Strategy, said there were “some similarities up to this point” between Musk and Jobs, but that the latest personal insult appeared to cross a line.
“Steve jobs did nott take it to this extent,” Moorhead said.
To avoid long-term damage, “the first thing Musk needs to do is issue a huge apology,” Moorhead said.
The analyst said the boards of Tesla and privately held SpaceX need to assert themselves in this situation to ensure Musk does not go off the rails.
“If he does the right thing, he can recover from this,” Moorhead said. This is America, and everybody likes a comeback story.”
Musk has become embroiled in a series of spats with the news media — chastising reporters for focusing on accidents of autonomous cars instead of their safety potential, and accusing one news organization of being “relentlessly negative” about Tesla.
Last month, he alleged “sabotage” at Tesla’s operations by an employee, who responded by claiming to be a “whistleblower.”
When documents revealed he donated to a Republican political group, despite his criticism of the current administration, he responded by saying he gives “to both parties to maintain dialogue.”
– Hero worship persona –
In an earnings call, he berated analysts for asking “boring” questions and sidestepped questions about Tesla’s massive capital needs.
Musk’s conduct “of course is not appropriate for a CEO,” said Bob O’Donnell, founder of Silicon Valley-based Technalysis Research.
O’Donnell said Musk has fallen into a “hero worship persona” but has failed to live up to the responsibility that implies.
“He loves the fact that everything he says is reported in the media, but if you’re in that position, you need to be an adult about it,” O’Donnell said. “He keeps putting his foot in his mouth.”
|NASDAQ:TSLA||310.1||16 July 2018||-8.77||311.71||315.16||306.25||7,818,600|
|HeffX-LTN Analysis for TSLA:||Overall||Short||Intermediate||Long|
|Neutral (-0.05)||Bearish (-0.34)||Neutral (-0.10)||Bullish (0.31)|