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Tesla rocked by latest executive shakeup, Musk's behaviour on webcast

International Business
Fri, 07 Sep 2018
Reuters


San Francisco: Tesla Inc's shares dropped the most in two years on Friday, rocked by the departure of its accounting chief after just a month and mounting investor concerns about chief executive Elon Musk's behaviour after he smoked marijuana on a live webcast.

Investors in the electric carmaker are on edge after a tumultuous August, during which Musk proposed and then abruptly pulled the plug on a go-private deal. Tesla said chief accounting officer Dave Morton resigned because of discomfort with the public attention and pace of work.

Morton, whose departure comes after the US Securities and Exchange Commission opened an inquiry into Musk's aborted plan, joins a list of executives who have left Tesla recently.

Bloomberg also reported on Friday that chief people officer Gaby Toledano would not return from a leave of absence just over a year after joining.

Even before Musk’s surprise August 7 Twitter disclosure that he had funding "secured" for a go-private deal, Tesla had been under scrutiny from investors, analysts and short-sellers as it works to hit production targets and slow its cash burn.

Morton, who joined Tesla on August 6, was quoted in a company filing on Friday saying he believes "strongly" in Tesla and that he had no disagreements with the company's leadership or its financial reporting.

Analysts on Friday reiterated their call for Tesla to bring in another senior leader to provide more support as it strives to expand production and potentially raise more capital. Musk has said he expects the company could turn profitable in the second half of this year.

"We have been calling for a co-CEO or COO to assist to codifying the leadership structure and in so doing, the culture at Tesla," said James Albertine, analyst at brokerage Consumer Edge.

"We think this is further evidence that the time is now for management and the board to address these issues."

Tesla's $1.8 billion junk bond maturing in August 2025 plunged as much as four cents on the dollar to below 82 cents, a record low, in Friday trading, pushing the yield above 8.8 per cent.

The bond had tumbled earlier this week as Musk renewed an attack on a British caver whom he had previously insulted on social media a day after Mercedes-Benz unveiled a challenge to the electric car maker.

Late on Thursday, Musk was filmed smoking marijuana and drinking whiskey in a 2-1/2-hour live Web show with comedian Joe Rogan that swiftly spread across Instagram and other social media. Recreational marijuana is legal in California.

Tesla shares, down just 1pc after Musk's appearance on the Rogan podcast overnight, fell as much as 10pc after Morton's resignation and were still down 5.1pc at $266.75 in late morning trading.

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