Tesla falls as Musk says stock too high in 2018-style tweets

Dana Hull
Bloomberg

Tesla Inc. shares plunged after Chief Executive Officer Elon Musk said the electric-car maker’s stock is too high in a stream of tweets reminiscent of the posts that securities regulators sued him over in 2018.

The billionaire said in a separate post that he’s selling “almost all” of his physical possessions and won’t own a house. He also renewed his call for reopening the economy and then recited parts of the “Star Spangled Banner.”

Tesla shares fell as much as 13% in New York trading. The stock is still up about 70% for the year, an advance that’s put him in position to meet the final performance threshold he needs to receive stock options that would yield a windfall of about $730 million.

Tesla and SpaceX Chief Executive Officer Elon Musk speaks at the SATELLITE Conference and Exhibition in Washington, Monday, March 9, 2020.

“We view these comments as tongue-in-cheek and it’s Elon being Elon,” Dan Ives, a Wedbush Securities analyst with the equivalent of a hold rating on Tesla, said in an email. “It’s certainty a headache for investors for him to venture into this area as his tweeting remains a hot-button issue.”

Musk, 48, told the Wall Street Journal in an email that he wasn’t joking and his tweets weren’t vetted before he posted them. His net worth fell about $2 billion to $37 billion as of 12:30 p.m. in New York.

The tweets come days after a profane outburst during Tesla’s first-quarter earnings call in which Musk railed against shutdown orders aimed at containing the coronavirus. He told analysts he was worried about not being allowed to reopen the company’s vehicle-assembly plant in Fremont, California, and compared shelter-in-place measures with forcible imprisonment.

“Musk is frustrated, and he has a pattern when he’s under pressure to turn to Twitter,” Gene Munster, a managing partner at Loup Ventures, said by phone. “It’s his form of therapy. But he also has an agenda, which is to get the Fremont factory back open.”

In December, Musk joked about Tesla’s stock being “so high” when it climbed above $420. That’s the price at which he said Tesla would go private in 2018, and the U.S. Securities and Exchange Commission said he picked the number to make a marijuana-related joke that would impress his girlfriend.

On Friday, Musk said his girlfriend, the musician Grimes, is now mad at him. They have a baby due on Monday, he wrote.

Musk and Tesla each paid $20 million to settle the securities-fraud lawsuit the SEC brought in September 2018 over the CEO’s tweets claiming that he had the funding to take Tesla private. But the dispute carried on into last year after Musk posted that the company would make roughly 500,000 cars in 2019 without advance approval from a Tesla lawyer.

The two sides amended their earlier agreement that aimed to set limits on his tweeting by adding specific topics that Musk isn’t supposed to post about without pre-approval. The subjects include the company’s financial condition, potential mergers or acquisitions, production and sales numbers, new or proposed business lines, projections and forecasts that haven’t been previously published, and Musk’s purchase or sale of Tesla securities.

Musk said in May 2017, when Tesla had a roughly $50 billion market capitalization, that the valuation was higher than the company deserved.

“We can only guess at motivations behind his sequence of tweets,” Ben Kallo, a Robert W. Baird analyst, said in a note to clients. He has a $700 price target for Tesla’s stock but warns there could be “significant uncertainty over the next 2-3 quarters” regarding the company’s efforts to restart production and keep sales buoyed in the midst of a recession.

When asked if he was selling his possessions because he needed cash or was protesting, Musk responded the answer is neither. He’s long sought to reach Mars with his rocket company, Space Exploration Technologies Corp., and is devoting himself to that effort, and to the Earth, he wrote.