I was gonna build an electric truck, but then I got high
The downfall of Elon Musk continues.
Heedless of investor concerns about his recreational drug habit, Thursday night Elon Musk smoked a mixture of tobacco and marijuana while drinking whiskey on camera during an appearance on the Joe Rogan Experience podcast.
Friday morning, the video of the podcast/smoke sesh went viral, just as two key Tesla executives announced their resignation. Chief accounting officer Dave Morton, who had been on the job for one month, abruptly quit, and human resources chief Gabrielle Toledano said she would not return from her leave of absence.
FreightWaves criticized Elon Musk’s now-infamous “funding secured” tweet for being half-baked, but we didn’t mean that he should get all-the-way baked.
Tesla stock (NASDAQ: TSLA) fell 6.53% today and is down about 25% for the month, despite rising Model 3 production, which is strong, but has dropped back below Tesla’s magic 5,000 per week run rate. The Tesla 5.3 coupon bond maturing in 2025 is in deeper trouble—it dropped to all-time low of 82.03 cents on the dollar. The 2025 bond accounts for $1.8B of Tesla’s debt load, and the rising yield signals that Tesla is in even greater danger of default on its debt obligations.
“Today’s trading made it abundantly clear why startups raise equity and mature companies raise debt,” said Daniel Pickett, CFA, FreightWaves chief data scientist and former automotive bond trader.
“It’s the bondholders who matter, not the stockholders, and the bonds keep going down. I don’t even look at the stock anymore, because that’s emotional. I look at the 2025 bonds, and I look at it incessantly,” said Jim Cramer on CNBC’s Squawk on the Street” earlier today.
Musk’s reckless behavior comes just a day after short seller activist Andrew Left, from Citron Research, filed a class action lawsuit against Tesla, alleging that some short sellers were forced to cover their positions after Musk tweeted that he was considering taking Tesla private at $420 a share. By the way, that price would now represent a 59.5% premium over Tesla’s current share price.
Left’s complaint alleges that Musk “artificially manipulated the price of Tesla securities to damage the Company’s short-sellers, and in the process, damaged all purchasers of Tesla securities by issuing materially false and misleading information.”
At the time, we wondered whether this was an attempt to pump TSLA’s stock price in order to avoid redeeming the debt on $900M in convertible bonds that are set to mature in February.
We wonder when the other shoe will drop: when Tesla’s board, stacked with Musk cronies, will finally act in the shareholders’ interests and rein this nonsense in.