Costly outburst: Elon Musk slammed analysts for asking ‘boring bonehead’ questions
More than £3.4billion was wiped off the value of Tesla after Elon Musk dismissed ‘boring bonehead’ questions about the electric car company’s finances in a conference call.
In an exchange that left Wall Street stunned, the eccentric chief executive refused to answer market analysts and instead fielded 20 minutes of questions from a 25-year-old YouTube star.
He rebuked investors for focusing on ‘short-term things’ and told them to ditch shares if they were afraid of volatility. ‘I am not here to convince you to buy our stock,’ the 46-year-old billionaire said.
After the call, shares in Tesla plunged by as much as 8 per cent.
In a note titled ‘the importance of boring questions’, Morgan Stanley analyst Adam Jonas told clients: ‘Tesla’s conference call was arguably the most unusual call I have experienced in 20 years on the sell-side. To be clear, it didn’t go very well.’
Musk is one of America’s most famous entrepreneurs. He made his fortune at tech start-up Paypal, and is now a serial investor in pioneering technologies. His other big company, Space X, uses reusable rockets for space missions.
Analyst calls are a regular part of listed companies’ work in the UK and the US. They give experts who study stocks and shares the chance to quiz company bosses about their results.
In the US many companies file their results after the stock market closes at 4pm, or 9pm UK time. Then, an hour or so later, chief executives field calls from investors and analysts.
When it reported results, Tesla had surprised the market, boasting of growing revenues and better production. The share price rose in after-market trading. Tesla’s call then started normally enough.
But 37 minutes in, as analysts probed Tesla’s Model 3 car production troubles and its plan to become profitable, Musk decided he’d had enough.
Interrupting Wall Street veteran Toni Sacconaghi, of Bernstein, mid-question, the chief executive said: ‘Excuse me – next, next. Boring, bonehead questions are not cool. Next?’
The next person, Joseph Spak, did not fare any better.
His question about Model 3 reservations was met with 14 seconds of silence, before Musk suddenly replied: ‘These questions are so dry. They’re killing me.’
Musk, who has had an on-off relationship with model Amber Heard, then switched to questions from YouTube video maker Galileo Russell who runs ‘a new financial talk show geared towards millennials’.
The theatrical performance drew criticism from some frustrated analysts, who said it detracted from results that were better than expected.
Sacconaghi later said he accepted Musk’s brashness was part of his character: ‘It has been acknowledged that Elon Musk is a genius and a visionary and alongside that there are quirks.’ However Rebecca Lindland, of Kelley Blue Book, said: ‘I just left the call very frustrated. Elon, you’ve got to grow up.’
Some company executives sided with Musk. ‘Thank you, Elon Musk, for taking the floor from old, tired, boring short-sighted questions and allowing a retail investor to shine a bright light on your amazing story’, tweeted Cathie Wood, boss of New York’s tech firm ARK Invest.
Shares in Tesla were down 6.7 per cent, or $20.23, to $275.53 at one stage, but recovered to $284.45.
Professor Christian Stadler, of Warwick Business School, said the clock was ticking for Musk. ‘If Tesla carries on the way it is going it will not survive,’ he said. ‘On the one hand, it would have broken down long ago if it wasn’t for Elon Musk.
‘But investors are getting more and more worried, the hype is starting to wear off and Tesla needs to find solutions quickly.’