SAN FRANCISCO : Tesla’s stock and bond prices dropped on Wednesday after Chief Executive Elon Musk renewed an attack on a British caver whom he had previously insulted on social media and a day after Mercedes unveiled a challenge to the electric car maker.
The stock dropped 2.8 per cent to $280.74, the lowest level since late May, following a 4.2 per cent decline on Tuesday after Mercedes introduced its first fully electric car in Stockholm.
The $1.8 billion high-yield bond Tesla issued a year ago hit a record low price on Wednesday. It also became more expensive to insure Tesla’s bonds against default.
Tesla’s stock has lost a quarter of its value since August 7, when Musk tweeted that he had secured funding for a previously undisclosed plan to take Tesla private.
Musk on August 24 abandoned that plan, but he faces lawsuits and a US Securities and Exchange Commission investigation into the factual accuracy of his tweet that funding for the deal was “secured.” The incident is weighing on investor confidence and has hurt the credibility of Musk, long viewed by Tesla supporters as its most valuable asset.
Also raising concerns about Musk’s leadership and focus as Tesla struggles to increase production of its Model 3 mass market sedan, BuzzFeed News reported late on Tuesday that Musk, in an email to the news site, called British cave diver Vernon Unsworth a “child rapist.”
Musk in July apologized to Unsworth for similar insults he made on Twitter following the rescue of a dozen Thai schoolboys and their football coach from a cave in Thailand. Unsworth, who played a leading role in the rescue, drew Musk’s wrath when he said that a mini-submarine created by Musk’s rocket company SpaceX to help in the rescue “had absolutely no chance of working.”
BuzzFeed reported that Unsworth, through his attorney, denied Musk’s accusations, and that it found no evidence to substantiate Musk’s claim.
“Elon Musk’s ongoing campaign of publishing vile and false accusations against Mr. Unsworth is outrageous,” Unsworth’s lawyer, L Lin Wood, said.
“Musk has publicly and clearly stated that he ‘hopes’ to be sued. Let me be equally clear in response - Musk will be sued - not because of his hopes, but because he deserves to be sued,” Wood said.
Previous attacks by Musk against Unsworth on Twitter, and his surprise announcement about taking Tesla private, have led to concerns about Musk’s judgment and the ability of Tesla’s board to influence his behaviour.
“He should not tweet about things outside of car production and the auto industry,” said Tigress Financial Partners analyst Ivan Feinseth, who has a “neutral” rating on Tesla. “The board, even though it is friendly to him, has now been put in a position where the internal governance of the company has been questioned.”
Money-losing Tesla has been burning through cash as it has aggressively ramped up production of the Model 3, a process Musk has called “production hell.” Tesla bulls are counting on Musk to exponentially raise production, leading to long-term profits. — Reuters