Wall Street Bashes Elon Musk’s ‘Twilight Zone Act’ in Tesla’s Meltdown
ByCCN: Everyone is running out of patience withElon Muskand his antics as the CEO of Tesla. Following the company’s spectacularly disappointing earnings report, Goldman Sachs and Wedbush downgraded Tesla’s stock on Thursday.
The downgrades weren’t a surprise given the dismal numbersTeslareported. However, the scathing lashing given out by the Wedbush analyst did take some aback.
The Research Note That Could Make History
Clearly frustrated with Musk, Wedbush analyst Daniel Ives’ note to investors was part venting, mostly true, and should be a scream to Musk to get it together.
“In our 20 years of covering tech stocks on the Street we view this quarter as one of top debacles we have ever seen while Musk & Co. in an episode out of the Twilight Zone act as if demand and profitability will magically return to the Tesla story.”
The analyst went on to describe a “demand story at Tesla” that is evolving. Unfortunately, the company has not been able to adjust.
“We no longer can look investors in the eye and recommend buying this stock at current levels until Tesla starts to take its medicine and focus on reality around demand issues which is the core focus of investors.”
With that said, the firm lowered its rating to neutral from outperform. It smashed the price target to $275 from $365. While it had been comfortable with its price targets, this last quarter was too much.
Tesla’s Funny Math
Goldman Sachs cut its price target to $200 from $210. It maintained its sell rating.
In its note, Goldman Sachs analyst David Tamberrino raised concerns about the Tesla’s guidance numbers.
“Ultimately, we believe the company’s ‘if we build it, they will come’ mantra likely requires incremental incentives (or some form of this) in order to entice incremental sales – which also will weigh on gross margins.”
Worst Quarter Ever
Teslareporteda loss of $702 million in the quarter. Its loss per share was $2.90, which was far more than the $0.69 analysts had expected.
Musk heads back to court Thursday over tweeting. It’s that tweeting over guidance that landed him in trouble with the SEC.
Still, this week, he tweeted somevery odd things.
Tesla blows haha
— Elon Musk (@elonmusk)April 24, 2019
This may be funny to Musk, but more observers are saying even if the SEC fails to rein in Musk, Tesla’s board should step in and do so. While he’s been stripped of his title as chairman, it’s time to remove him as CEO too,some say.
For example, Jeffrey Sonnenfeld, senior associate dean at the Yale School of Management, took a swipe at Tesla’s highly touted autopilot feature in speaking negatively of Tesla’s board. OnCNBCThursday, he said:
“When is the board going to wake up? You know what they are? They do understand cruise control better than anybody else. The board is on ‘cruise control.”
Shareholdershave shown resistance to removing Musk as CEO.
About The Author
If you can buy it, trade it, invest in it, or sell it, I write about it. For more than 20 years, I’ve covered all things finance. I threw myself into covering the crypto space with the keen understanding that it would be an industry disruptor. I’m in constant search for the real Satoshi Nakamoto!