Tesla stock has taken a dive following what has been described as a “bizarre” conference call with CEO Elon Musk.
Elon Musk reportedly told investors not to purchase Tesla stock if they couldn’t stomach market volatility — and many of them seem to have taken his advice, resulting in a huge drop in Tesla stock, according to Bloomberg. An intense conference call took place on Wednesday night shortly before another huge drop in Tesla’s stock price, falling by 8 percent as of noon on Thursday.
This drop also comes shortly after Musk refused to answer questions from analysts shortly after it was reported that the company had once again burned $1 billion in cash in a single quarter. Tesla reportedly has only $2.1 billion in usable cash now after starting the year with $3.1 billion. The company announced a plan to restructure deals with contractors with Musk stating: “The number of third-party contracting companies we’re using is out of control. We’re going to scrub the barnacles on that front. We’ve got barnacles on barnacles. So there’s going to be a lot of barnacle removal.”
Musk has remained adamant that the company will not require a capital raise this year, specifically stating that he doesn’t want one. But many doubt the CEO’s claims, including Ben Kallo, an analyst at Robert W. Baird & Co. who stated: “He reiterated that he’s not going to raise cash. Now, no one believes that. His approach obviously didn’t go over well.”
The electric car company has faced a tough few months. Musk’s company was forced to recall half of the cars they ever produced. Tesla recalled 123,000 Model S vehicles, stating that any of the vehicles built before April 2016 were affected by a power steering issue. Last month, Moody’s Investors Service downgraded the company’s debt and generally stated their negative outlook on Tesla’s credit due to “the likelihood that Tesla will have to undertake a large, near-term capital raise in order to refund maturing obligations and avoid a liquidity shortfall.”
Tesla also recently halted production on their Model 3 production line, claiming that the sudden halt in production was to fix some of the issues that have caused many delays so far, one of which may be the companies decision to automate the final process of Model 3 production using robotic machinery. These machines have reportedly been replaced with human workers.