The Analyst Musk Cut Off Says Investors Are Worried About TeslaBy
“There is incremental concern when, on an analyst financial quarterly call, the CEO doesn’t appear to want to talk about important financial metrics,” Toni Sacconaghi of Sanford C. Bernstein & Co. said Thursday on Bloomberg Television. “The read-through is that potentially the CEO doesn’t care or isn’t focused about those financial metrics or ultimately the numbers don’t tell a good story. But either of those interpretations are not particularly comforting.”
Tesla shares fell 5.6 percent -- the biggest drop in more than a month -- after Musk’s remarkable earnings call. The CEO rejected analysts’ questions following another quarter in which the company burned more than $1 billion in cash and pushed back production of its Model Y crossover. Tesla’s 5.3 percent notes due 2025 were down 1 cent on the dollar and were quoted at 88 cents, according to Trace bond-price data, as of 3:35 p.m. in New York.
Sacconaghi, who has the equivalent of a hold rating on Tesla and a $265 price target on the stock, has had a rough week. He was cautious about Apple Inc. ahead of the tech giant’s strong earnings on Tuesday. The next day, Musk cut him off for asking what the CEO called “boring, bonehead” questions.
“For investors who know Elon, they’re probably not entirely surprised,” Sacconaghi said Thursday. “But as I mentioned before, a reticence to discuss financial metrics in a forum that’s created for financial metrics can be incrementally worrisome.”
Sacconaghi also expressed concern about the gross margins on the Model 3 sedan. Tesla had previously projected they could reach 25 percent soon after assembly reached a rate of 5,000 cars per week. But while the company expects to reach that level of output in about two months, it’s pushed back the timing that margin may be achieved to mid-2019.
“The gross margin trajectory is weaker than the company thought a couple, three months ago,” Sacconaghi said. “That’s important, because gross margins obviously are an important driver of whether a company can make money, and making money has been elusive for Tesla. So that being pushed out six or nine months was certainly an incremental negative.”
— With assistance by Shery Ahn, Amanda Lang, and Molly Smith