Elon Musk has had a busy week.
He smoked pot on a podcast with American comedian Joe Rogan, witnessed the departure of top Tesla executives, and reportedly is likely to reach a settlement with the federal government over a Twitter announcement about taking the electric carmaker private.
The chaotic environment surrounding the 47-year-old entrepreneur is nothing new. Musk has long bucked the traditional behavior of a chief executive officer. Earlier this year, he chided analysts for asking dumb questions on a company earnings call and instead gave the bulk of the time to a 25-year-old YouTube personality. Musk has since apologized for his comments.
Analysts, however, are concerned that his attention-grabbing headlines are overshadowing the Palo Alto-based company’s efforts to revolutionize the electric car market.
“We think credibility has taken a hit,” analysts at RBC Capital Markets wrote after Musk’s privatization plan in August. “Tesla and CEO Elon Musk have lost some of their luster. This is a non-trivial point considering that investor belief in Musk and wanting to invest with him has, to date, arguably been the largest driver of the stock.”
Musk, in a public email to employees sent on Friday, downplayed any concerns, promising to soon report the company’s best quarter in its history.
“For a while, there will be a lot of fuss and noise in the media. Just ignore them. Results are what matter and we are creating the most mind-blowing growth in the history of the automotive industry,” he wrote.
[Related: Tesla sinks after Elon Musk scraps plan to take company private]
Launched in 2003, Tesla has taken all-electric vehicles mainstream with its high-end models. Production of the company’s mass-market car, known as the Model 3, has been plagued with issues, however. While the Model 3 is one of the best-selling automobiles in the United States, Tesla was having difficulty producing enough to meet demand until recently. In July, the company reportedly achieved its target of producing 5,000 units in a week for the first time, but it has yet to turn a quarterly profit.
Competitors, meanwhile, have begun to gain ground, particularly on the self-driving technology that Tesla is also developing.
General Motors has teamed up with Waymo, Google-parent company Alphabet’s autonomous vehicle arm, and already begun on-road testing. Analysts at Morgan Stanley said Tesla likely has a higher cost of capital compared with Waymo and that Musk’s company is potentially less capable of monetizing related business lines.
“We assume Tesla gets off to a faster start than Waymo in terms of shared miles accumulation, but that Waymo catches up and surpasses Tesla just a few years later and with likely a more sustainable and protected business model,” the analysts wrote.
Musk’s behavior poses an additional risk. His tweet about the plan to take Tesla private sent shock-waves through the investor community, leaving shareholders guessing at whether his comment that “funding secured” was accurate.
The Securities and Exchange Commission reportedly is investigating the claim, which Musk said was based on talks with a Saudi investor. He has since walked back the plan — which he said was motivated by a desire to prevent so-called “short-sellers” from profiting at Tesla’s expense — and is said to be likely to settle with the regulator after an investigation as long as six months.
Musk’s office did not respond to an interview request for this article. Earlier this week, BuzzFeed posted emails in which the CEO reiterated inflammatory comments about a British diver who helped rescue a youth soccer team caught in a cave in Thailand. Musk labeled his comments “off the record” but the news outlet published them anyway, arguing that the reporter didn’t agree to the terms of the exchange.
Journalists typically must consent beforehand to an “off the record” discussion for the arrangement to take effect.
Amid the uproar, two top Tesla executives departed on Friday. In a note announcing his resignation, the company’s accounting chief attributed his decision to the heightened scrutiny on Tesla.
“The level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations,” said Dave Morton, who worked at Tesla less than a month. “As a result, this caused me to reconsider my future.”
Tesla dropped 6.3 percent to $263.24 in New York trading after the announcement. The company’s stock price has fluctuated widely throughout the year, often tied to headlines about Musk’s behavior or issues with Model 3 production. It peaked for the year at $379.57 in August, then slid as questions mounted about Musk’s plans to offer a buyout of $420 a share.
