Wed. Oct 28th, 2020

Elon Musk goes on Twitter rant — Tesla’s stock falls

Elon Musk sent stocks of his electric car company on a freefall on Friday after tweeting that the share price may be too high as the billionaire Tesla CEO posted a bizarre series of tweets.

‘Tesla stock price is too high imo,’ Musk tweeted at around 11:11am Eastern Time on Friday.

Right after he posted this tweet, Tesla shares began a precipitous nosedive on Wall Street.

Sure enough, Tesla shares dipped on Friday, falling more than 11 per cent and trading at around $693 as of the afternoon.

Fans of the Tesla CEO are worried and confused on Friday after he posted a series of incoherent tweets that included misquoted lyrics of The Star Spangled Banner as well as a strange pledge to sell his possessions.

Tesla CEO Elon Musk went on a bizarre Twitter rant on Friday that sent shares of his company down by more than 11 per cent

That tweet is likely a reference to Musk’s controversial comments slamming the coronavirus lockdown, which he called ‘fascist’ on Wednesday.

The tech entrepreneur also tweeted that he intends to sell ‘almost all physical possessions.’

‘Will own no house,’ Musk tweeted. He then remarked: ‘Just one stipulation on sale: I own Gene Wilder’s old house. 

‘It cannot be torn down or lose any its soul.’ 

In November 2013, Musk purchased a three-quarter-acre Bel Air home for $6.75million. 

That property once belonged to Wilder, the late Willy Wonka actor who died in 2016. Musk has since turned the property into a private school.

The home is one of six that Musk bought within walking distance of each other.

Musk also purchased a seventh home near Tesla headquarters in North California.

In total, he has spent more than $100million for seven properties since 2012, according to The Wall Street Journal

Musk then remarked on Twitter that his girlfriend, the musician Grimes, was made at him.

In response to another Twitter user, Musk revealed that Grimes, who is pregnant, is due to give birth on Monday. 

Musk also attempted to recite the Star Spangled Banner, tweeting: ‘And the rocket’s red glare, the bombs bursting in air…gave proof through the night that our flag was still there…Oh, say does that star-spangled banner yet wave…O’er the land of the free and the home of the brave?’

He then tweeted: ‘Rage, rage against the dying of the light of consciousness.’ 

In recent days, Musk has vented over the ongoing coronavirus lockdown.

Even though his company has reported healthy earnings, one of the biggest disruptions to Tesla has been the government-ordered shutdown of its factory in Fremont, California, which began on March 24.

Alameda County, where the factory is based, on Wednesday extended stay-at-home orders until May 31 and vehicle manufacturing is not considered an essential business that is exempt. 

On a conference call on Wednesday, Musk said he did not know when they could resume production. 

‘I think the people are going to be very angry about this and are very angry,’ Musk said as he went off track in the call about earnings. 

‘It’s like somebody should be, if somebody wants to stay in the house that’s great, they should be allowed to stay in the house and they should not be compelled to leave. 

‘To say that they cannot leave their house and they will be arrested if they do, this is fascist. This is not democratic, this is not freedom. Give people back their goddamn freedom!’

The strictest stay-at-home orders recommend that people only leave their homes for essential trips such as visiting the grocery store or pharmacy.   

Tesla shut down the California factory just as it was ramping up production of its new electric crossover utility vehicle Model Y, which it expects to generate record demand and higher profit margins.

Tesla on Wednesday said the Model Y was already contributing profits, marking the first time in the company’s history that a new vehicle is profitable in its first quarter.

Last month, Tesla said production and deliveries of its Model Y sports utility vehicle were significantly ahead of schedule, as it delivered the highest number of vehicles in any first quarter to date, despite the outbreak.

Tesla reported that it eked out a first-quarter net profit on Wednesday. 

The electric car and solar panel company said it made $16million from January through March, its third-straight profitable quarter.

Excluding items, Tesla posted a profit of $1.24 per share. Analysts had expected a loss of 36 cents per share.

Tesla shares are also up for the year after recovering from a sharp slump in March.

But Musk called the state stay-at-home order a ‘serious risk’ to the business.

‘So the expansion of the shelter in place or as frankly I would call it, forcibly imprisoning people in their homes, against all their constitutional rights, is my opinion, and breaking people’s freedoms in ways that are horrible and wrong, and not why people came to America or built this country, excuse me,’ Musk added later.

‘It’s an outrage. It will cause loss, great, great harm, but not just to Tesla, but any company. And while Tesla will weather the storm there are many small companies that will not.’

Tesla produces a fraction of the cars of its rivals but has a much larger stock market value on expectations of tremendous growth.

Musk said that while other carmakers were cutting back, Telsa was ramping up investment. 

He said Tesla might announce the location of a new US factory in one to three months.

Tesla in January said it expected positive quarterly cash flow and positive net income going forward. 

The company on Wednesday did not update its previous forecast of delivering half a million vehicles by the end of 2020.

Tesla said its free cash flow had been impacted by growing inventory due to coronavirus shutdowns.

The COVID-19 pandemic has disrupted demand for cars, with automakers including Tesla forced to furlough workers and close factories.

Vehicle demand in the United States has dropped as much as 80% in some hard-hit areas in March, but some analysts said sales appeared to recover slightly in the first two weeks of April.

The electric carmaker did not say when it planned to resume production at its Fremont plant.  

But Tesla on Wednesday said it expected production at its vehicle factories in Fremont, California and in Shanghai, China to ramp gradually through the second quarter.

The company said operations at its Shanghai plant were progressing better than expected, with production rates of its Model 3 sedan expected to hit 4,000 units per week, or 200,000 per year, by mid-2020. 

It delivered 88,400 vehicles during the first three months of the year, a 40 per cent increase from a year ago. 

That was aided by production at its new factory in Shanghai.

It said gross margins at its Shanghai factory were approaching those of Model 3 production in the United States. 

Musk also tweeted a link to a local news story about Texas lifting some restrictions this week, saying: ‘Bravo Texas’

Musk had earlier hit out at Silicon Valley, saying it had become ‘Sanctimonious Valley’ and ‘too much the moral arbiter of the world’

But of the $5.1billion in overall automotive revenue, nearly 7 per cent were due to regulatory credits – money Tesla receives from other automakers that buy the company’s carbon emissions credits to meet stricter regulation. 

Revenue from those credits nearly tripled from the last quarter.

Hargreaves Lansdown analyst Nicholas Hyett also flagged that Tesla’s free cash flow was negative last quarter and improved only modestly on a yearly basis.

‘The immediate future doesn’t look like the ideal time to be selling premium priced cars, so perhaps it’s no surprise guidance has been paused,’ Hyett said. 

On Wednesday, Musk tweeted his opposition to California shuts downs as he complained: ‘Hospitals in California have been half empty this whole time.’ 

He also retweeted his brother Kimbal Musk who said Colorado ‘is doing well’ and tweeted that the governor ‘has ended the stay at home order’. 

‘Bravo!’ Elon Musk tweeted at Governor Jared Polis.

Musk tweeted on March 6 that ‘the coronavirus panic is dumb’ but later offered to supply hospitals with free ventilators.

Then on Tuesday, Musk and a host of critics slammed YouTube for removing a video of two doctors suggesting COVID-19 death tolls are being boosted and urging an end to lockdowns because they do more harm than good.

YouTube took down the video of news conference featuring Drs. Dan Erickson and Artin Massihi, who run a private urgent-care clinic in Bakersfield, California, on Monday because they claim it violated their user policy by disputing health officials.

‘FREE AMERICA NOW,’ the 48-year-old tweeted. 

Alongside a link to a Wall Street Journal op-ed about whether lockdowns are saving lives, Musk also tweeted: ‘Give people their freedom back!’

He tweeted a link to a story about Texas lifting some restrictions this week, saying: ‘Bravo Texas’.

Musk later clarified, in response to a tweet from one of his followers, that he believed states should be reopening slowly.

‘Yes, reopen with care & appropriate protection, but don’t everyone under de facto house arrest,’ he tweeted.

Musk had earlier hit out at Silicon Valley, saying it had become ‘Sanctimonious Valley’ and ‘too much the moral arbiter of the world’.  

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