Tesla CEO Elon Musk is getting a backlash for having cut off questions from Wall Street analysts during Tesla’s Q1 2018 conference call this week.
Now Musk tried to clarify why he cut off them off in a series of tweets this morning.
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As we reported yesterday, the market didn’t mind Tesla’s Q1 2018 financial results with the stock being up ~1% after they released the results, but the market took offense at Musk shutting down Wall Street analysts and the stock started to plunge – ending the next day about 5% down.
While Musk said that the questions were “boneheaded” and “dry”, some saw it as the CEO refusing to take tougher questions from Wall Street analysts.
On Twitter this morning, Musk clarified in a series of tweets:
Sell-side analysts work for brokerage firms and make stock recommendations – not necessarily only to short sellers.
The two analysts that Musk cut off were Toni Sacconaghi from Bernstein and Joseph Spak from RBC Capital.
Sacconaghi is one of the top-ranked analysts on Tipranks and while he indeed never recommended Tesla’s stock, he has a ‘hold’ rating on it with a $265 price target. With this said, Sacconaghi did publish a note to clients a month ago claiming that the Model 3 order take rate was low among Tesla owners, which was misleading since it’s based on only one configuration currently available.
As for Spak, he is also ranked high on Tipranks and he also has a ‘hold’ rating on Tesla’s stock – with a price target of $305.
While neither analysts can be considered a ‘Tesla bull’, they haven’t really been contributing much to the short seller thesis on Tesla.
But Musk then continues clarifying that it wasn’t only about their intention, but the fact that questions were getting repetitive:
Ahead of the call with analysts, Tesla releases their ‘shareholders letter’, which analysts have an hour to go through before the call.
During the call, analysts have direct access to Tesla’s management and it’s generally not the time to ask for clarifications on what was released in the letter. The analysts are also given some time with Tesla’s investor relations to ask further questions after the call, which is generally used for those types of clarifications.
As for Spak’s question, it sounded like a clarification on the Sacconaghi’s previously mentioned note about the take rate.
Update: It looks like Spak got his answer after all:
As we already discussed yesterday, I think it was more about the questions getting repetitive and boring than anything else.
It looks like Musk might have been misinformed about the analysts’ intentions. While it’s true that there’s a lot of short interest on Tesla’s stock, those two are not the go-to analysts when short sellers are trying to justify their position.
I think that Musk is trying to adjust now after the backlash and the solution is probably somewhere in the middle with a mix of questions from Wall Street analysts, the media, and representatives from the retail investor base.
What do you think? Let us know in the comment section below.