Coverage: Tesla drops after bizarre earnings conference call

Shares in Tesla Inc. took a nosedive in after-hours trading today as chief executive officer Elon Musk cut off analysts during a first-quarter earnings call.

Lora Kolodny of CNBC.com had the story:

He dismissed a question about gross margins from Bernstein senior analyst Toni Sacconaghi as “boring.” Instead, Musk and other executives answered multiple questions from a Tesla enthusiast and Youtuber named Gali Russell.

The 25-year-old retail investor tweeted at Elon Musk on Monday, seeking to ask him a “crowdsourced” question during Wednesday’s conference call. Instead of a single question, Russell was able to ask several.

The stock drop may have become apparent around the time when Musk cut off analysts on the call. However, the company’s first-quarter update has also stoked concerns over Tesla’s cash burn and how, exactly, it will improve margins while ramping Model 3 production.

On the first-quarter call, CEO Elon Musk also promised a “reorganization” this month.

Jeremy C. Owens of MarketWatch.com reported that Musk insulted analysts, the media and others on the call:

By the time Baird analyst Ben Kallo took the phone more than an hour into the call, the apprehension was thick. Kallo took more time with an introduction to his question, which gave reasoning for why Musk should answer it and not be angry at him, than actually asking the question.

Musk did not really answer his question, instead complaining about leaks to the media and his own investors.

“I think that if people are concerned about volatility, they should definitely not buy our stock,” Musk said. “I’m not here to convince you to buy our stock. Do not buy it if volatility is scary.”

If volatility is scary, Tesla’s after-hours performance could double as another sequel to “Nightmare on Elm Street.” Shares originally gained after the numbers hit, but soon fell to a decline of about 1%. After Musk was rude to two analysts in a row, ignoring questions that investors actually cared about, that decline suddenly steepened to a loss of about 5%. If that drop holds into Thursday’s trading session, it would add to Tesla’s 3.3% decline so far this year, which is greater than a 1.4% decline for the S&P 500 index in 2018.

Dana Hull of Bloomberg called the conference call “highly unusual”:

During a highly unusual earnings call, Tesla Inc.’s chief executive officer cut off analysts and got defensive about probing questions pertaining to the electric-car maker’s finances. The company burned through more than $1 billionfor the third time in four quarters.

Musk, 46, said he won’t need to go back to equity or debt markets this year to seek additional funds for Tesla, but crossing Wall Street may be a bad idea. The billionaire wooed investors into buying $1.8 billion worth of bonds in August, which fell within a week. Five months earlier, Tesla sold about $1.25 billion worth of stock and convertible debt.

Here were some of the most head-scratching moments of the call:

Musk aimed his sharpest words at Toni Sacconaghi of Sanford C. Bernstein, who rates Tesla the equivalent of a hold. After the analyst asked a question about whether the company could reach its 25 percent gross margin target on the Model 3, Chief Financial Officer Deepak Ahuja said recently imposed tariffs, more expensive commodities and higher labor costs factored into the company’s guidance.

“Yeah, but we’re talking about a 3 percent to 5 percent difference, and that’s something that we’ll solve like within three months to six months later,” Musk said. “So don’t make a federal case out of it.”