Elon Musk says he doesn’t care if day traders sell their Tesla stock. Now those words are pinching his net worth.
The electric car manufacturer’s stock fell almost 6 percent Thursday after Musk’s contentious conference call with analysts over the company’s first-quarter earnings. The sell-off lopped almost $3 billion off Tesla’s market value, and Musk owns 20 percent of the company.
Musk grew agitated Wednesday when analysts pushed for details on Tesla’s nagging problem of failing to meet car-production targets.
The CEO began his answer by complaining about leaks from inside the company, then pivoted to investors whom he considered wrongly focused on short-term results.
“We have no interest in satisfying the desires of day traders,” Musk said. “I couldn’t care less. Please sell our stock and don’t buy it.”
Some investors took his advice.
Tesla Inc. is not the first company to suffer a stock sell-off after a testy conference call with investors or reporters.
Shares of United Airlines’ parent company plunged 12 percent in October after CEO Oscar Munoz and his lieutenants clashed with analysts who wanted more details about the company’s turnaround plan. United had beat market expectations for third-quarter profit, but executives couldn’t explain how they were going to compete against low-fare rivals and refused to discuss future plans.
On the other hand, shares of Scotts Miracle-Gro Co. barely budged after the lawn-care company’s CEO used profanity to dismiss analysts’ concerns about parts of the business.
“We can’t get you all to shut the f— up on this issue and so it means we are not publicly communicating properly,” said CEO James Hagedorn on a call in February 2017. Four years earlier, three directors left the company after a board reprimand of Hagedorn’s language. The CEO apologized for using “inappropriate” words and pledged not to do it again.
Researchers who say they examined 122,000 earnings calls found that a stock is more likely to move when executives use precise terms to describe the business rather than vague words such as “approximately” and “maybe.”
Straight talk helps investors understand a company, they said. Interestingly, that was true whether the executives delivered good or bad news, said the researchers at Harvard and universities in Sweden and Switzerland.
The researchers found one advantage to vague CEOs, however — they helped steer analysts away from overly upbeat forecasts about future earnings.
THEN THERE WAS ENRON
One of the most prominent instances of a CEO losing his temper on a call came in 2001 and featured Enron Corp. CEO Jeffrey Skilling.
When an analyst complained that the high-flying company didn’t include a balance sheet or cash flow statement with earnings reports, Skilling didn’t hide his contempt for the man.
“Thank you very much,” Skilling replied. “We appreciate that, ass—-.”
Congress made a federal case out of it. Skilling, chuckling about the incident, told lawmakers that if he could do the call over again, “I would not now have used the term that I used.”
Skilling was convicted of securities fraud, conspiracy and insider trading and sent to prison. Now 64, he is scheduled to be released next February. Enron collapsed into bankruptcy and pieces were sold off.
Associated Press business writer Charles Sheehan in New York contributed to this report.