Tesla shares, bonds tank as Elon Musk channels Capt Haddock to snub Wall St

Tesla’s bonds followed the shares lower and, with at least three brokerages cutting price targets for the stock and eight of 27 now recommending “sell”, several wondered what it would now cost the company to raise more funds this year if need be.

In a conference call on Wednesday, Musk refused to answer questions from analysts on Tesla’s capital requirements, saying “boring questions are not cool.” 

He instead took more than a dozen consecutive questions - unknown on such forums - from YouTube investment channel HyperChange TV, who had previously recommended buying Tesla shares. 

Cowen analyst Jeffrey Osborne dubbed the call, in which Musk talked of “barnacles, flufferbots, and bonehead bears”, surreal. Morgan Stanley’s Adam Jonas said it was the most unusual he had heard in 20 years in the business. 

“Irrespective of the Tesla CEO’s annoyance with the genre of questions he was receiving an important part of Tesla’s success has been its relationship with the capital markets in funding its ambitious plans,” Jonas wrote in a note to clients.

“The analysts on the call represent the providers of capital that Tesla has throughout its history depended upon” Of 27 brokerages covering the stock, nine now have a “buy” or higher rating, 10 “hold” and eight have “sell” or lower.

The company’s shares were down $18 at $283 soon after the opening bell in New York. They have lost more than a quarter of their value since touching a high of $389.61 in September, mainly due to reports of bottlenecks around production of the Model 3 sedan, seen as crucial to Tesla’s profitability. 

The call came after Tesla forecast lower capital spending for the year and reiterated it would turn a profit in the second half of the year. 

But Musk was also bullish on the pace of some of its more expensive projects, promising he would make a decision on the construction of a new Model Y factory by the fourth quarter and announce the location of a Chinese Gigafactory soon. 

He also pledged to cut costs by rationalising the number of third-party contractors Tesla is using. “(That) has really gotten out of control,” Musk said. “So we’re going to scrub the barnacles on that front. You’ve got barnacles on barnacles. So there’s going to be a lot of barnacle removal.”