Another Disastrous Week for Tesla, Embattled CEO Musk
It’s been another rough week for Tesla and embattled CEO Elon Musk as multiple bad headlines involving the company broke, hammering its stock downward.
Shares fell 2.8% in pre-market trading Friday after the National Transportation Safety Board determined that a Tesla Model 3 involved in a fatal crash in Florida in March was operating on the company’s semi-autonomous autopilot system. The trend continued as shares tanked another 5.28% during early afternoon trading Friday on the East Coast.
Tesla stock has fallen more than 30% already in 2019, and after news of the crash broke Musk dropped another bombshell about the overall state of the company. The CEO introduced an effort to cut costs in an email sent to all Tesla employees, according to a report on Electrek.
In the email, Musk revealed the company had a $2.2 billion cash position at the end of Q1, but that would only last about 10 months at the rate Tesla was burning through its cash flow. He further explained that a team will be examining all payments made, including “parts, salary, travel expenses, and rent.”
These duties will fall on new CFO Zach Kirkhorn, who will be closely examining and signing off on all outgoing payments, with Musk stepping in on every tenth transaction, according to the email.
These are just some of the more recent red flags that have popped up involving Tesla and it’s eccentric CEO who has also been assailed with multiple court dealings, including one over a Twitter spat with a diver in July of 2018 during the rescue of children trapped in a cave in Thailand.
But what may be the biggest tell on the state of the company and its future was when a Security and Exchange Commission filing showed that one of Tesla’s biggest investors, T. Rowe Price, sold about 81% of its 8.9 million shares during the first quarter of the year.
Per Seeking Alpha:
- T. Rowe Price (NASDAQ:TROW) sold more than 80% of its Tesla (NASDAQ:TSLA) shares during this year’s Q1, holding 1.7M shares as of March 31 vs. 8.9M shares at year-end 2018, according to an SEC filing.
- TROW’s move leaves the fund manager holding the smallest number of TSLA shares since 2013 after ramping up its holdings late last year, even as the stock dropped following Elon Musk’s “funding secured” tweet.
- Because TROW runs both actively managed and passive funds, some of the decline in holdings may have been caused by money flowing out of funds rather than reduced positions.
- Even as TROW steps back from TSLA, it has continued to pump money into potential competitors in the race to develop autonomous vehicles, including an equity investment in GM’s Cruise driverless car unit.