Tesla’s share price dropped c. 9% on Friday, 17 August after The New York Times (NYT) published an interview with CEO Elon Musk in which he outlined the serious struggles he faced personally and in meeting important production targets for the company’s mass-market Model 3 sedan. He described 2018 as “the most difficult and painful year of my career … It was excruciating.” In the interview, Musk said he has been working 120-hour weeks as Tesla attempts to fix production problems with the much-anticipated Model 3 – a critical product for the company’s future.
The Tesla share price is down 16.1% (up to 17 August) since Musk initially tweeted on 7 August that he had “funding secured” to take Tesla private at $420/ share – a public statement which, as it turned out, could be a violation of US Securities and Exchange Commission (SEC) rules. The SEC promptly began an investigation and has reportedly sent out subpoenas for information, with Musk and board members expected to meet with SEC officials this week.
The NYT also reported (quoting unnamed sources) that Tesla is searching for a No. 2 executive to take some pressure off Musk (a claim Musk says he’s not aware of), while some Tesla directors have reportedly expressed concern both about Musk’s workload and his use of sleep medication, Ambien. However, Musk said that he doesn’t regret the Twitter post and has no plans to stop tweeting.
In April, Bloomberg wrote that there is a “genuine risk” that Tesla could run out of cash in 2018, while some analysts (at Moody’s, Goldman Sachs etc.) have also argued that Tesla is in financial trouble. As at the end of 2Q18, Tesla had $2.24bn in cash (vs $3.4bn at the start of the year), which the company said it expected to grow in 3Q18.
Tesla’s share price is down 4.1% since the NYT article appeared.