August has been a month rife with major swings in fortune for the US-based electronic car producer. Following the appointment of Dave Morton as Tesla’s Chief Accounting Officer (CAO) in early August, Elon Musk dropped a bombshell of a tweet:
This wasn’t merely another one of Musk’s spontaneous tweets: It was earthshattering in its influence on Tesla’s shares. Share value jumped soon after the post, trading as high as $371.15 before giving back gains, CNBC reported.
Afterward, stocks were halted for an hour. They resumed later, registering an 11% increase, and closed at $378.
What happened was basically Musk riding high following the reveal that Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF) had bought 5% of Tesla’s shares. This was supposedly worth between $1.7bn and $2.9bn, effectively turning the PIF into one of Tesla’s largest shareholders.
Soon, however, doubts about Tesla going public had begun to surface, as well as suspicions that such a tweet was in breach of SEC (U.S. Securities and Exchange Commission) regulations.
These doubts and suspicions would later materialize into something more, sending Tesla into the spiral of trouble it’s going through today.
Stocks take a dive
Tesla stocks are currently sitting at $263.24, a 30.38% drop from the day Musk posted his tweet, and a 12.74% drop from its value on August 31st, a mere 10 days earlier.
On August 16th, an interview with the New York Times had been published revealing the stress Musk was going through, reportedly working 120-hour weeks at a time and using sedatives to get some sleep. Naturally, the stock market was quick to react, pushing Tesla share value down.
On August 24th, and after much debate in the financial world, Tesla announced in a post on its corporate blog that Musk had scrapped plans to go private. This once more sent stocks falling in a steady decline, gradually dropping as uneasiness continued to plague investors’ minds.
The steady drop continued until another revelation further pushed it over the brink.
On September 7th, the past Friday, Tesla CAO Dave Morton, who’d only been at the company for about a month at this point, offered his resignation.
An unhealthy work culture?
“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 explained.
Another high-level executive quit soon after, and many other employees had already left earlier in the year, the Washington Post reported.
Morton’s exit sent Tesla’s stocks falling to where they are today, bringing up the question whether there was a problem with the company’s work culture. Many media outlets, however, are putting the blame on Musk himself, whose erratic behavior does not instill assuredness in investors’ minds. The troubled CEO has been involved in a string of controversies just this year alone.
Musk is brilliant, but is his own worst enemy
“If you have anyone who can do a better job, please let me know,” Musk told the New York Times in the now infamous interview. “They can have the job. Is there someone who can do the job better? They can have the reins right now.”
Say what you will, but there is no denying that Musk is an iconic, one of a kind innovator. His projects are highly ambitious, mirroring their creator’s aspirations. What are those aspirations? They’re varied and many, to be frank.
At his essence, Musk is hell-bent on grabbing the future by the horns. He often talks about the future of humanity and more so about its follies, as if he is setting himself up as judge and jury on human matters.
Yet, when he goes on these past-midnight social media outbursts, he cannot help but hurt himself, his company, and his work. His ‘going private’ tweet shook investor faith in him and has gotten him under the microscope of the SEC – not to mention a recent lawsuit by short seller Andrew Left.
Left accused him of manipulating the market with his unsolicited tweet. Whether this is against SEC and market regulations is still under debate.
Musk could see similar lawsuits pour in as the fallout from his controversial tweets sets in.
Is Saudi remaining in the shadows?
This whole ‘going private’ tweet was instigated by burgeoning trust in Saudi dollars. When it was revealed that the country’s PIF had quietly invested 5% in the company, the timing of Musk’s tweet began to make more sense. Saudi were also to be winners in this transaction.
“What better way to hedge your portfolio than to bet on the company that wants to make your main asset (oil) obsolete?” Forbes had mused last month.
Saudi knows the oil sector is not going anywhere for several decades to come, but when the time comes that we reach peak oil, they want to make sure they have secured themselves with diversified investments. This applies doubly so here, as Tesla and its ilk are the companies that could lead the future of transportation and technological innovation.
Ever since Musk shared his tweet, there hasn’t been much news about any developments between Tesla and Saudi. The Kingdom could be waiting for the dust to settle following Musk’s endless controversies before they can commit to a new move.
They might be waiting a while, it seems.