March was Tesla Inc (NASDAQ:TSLA)’s worst month in years, as cracks in the company’s story are starting to show. Today Tesla stock continued to slide following a joke CEO Elon Musk cracked about bankruptcy over the weekend. Investors and analysts are anxiously looking forward to the company’s first-quarter delivery report, which is expected within the next day or two.
Tesla stock down another 8% on more bad news
In all of last week, Tesla stock plunged nearly 12%, but already today, it’s down by an additional 8% as investors process the newest collection of bad headlines.
The National Transportation Safety Board said last week that it’s investigating a deadly crash of a Model X in California. Tesla later followed up by publicly confirming that Autopilot was indeed engaged at the time of the accident, but the NTSB was anything but pleased by that. Regulators rebuked the automaker, saying that it was “unhappy” that the company had released “investigative information” from the data collected from the Model X that crashed, ultimately claiming the life of its driver. They said they needed the company’s assistance in decoding the data from the crashed vehicle.
Tesla also suggested that the driver did have time to place his hands on the wheel so he could take control and avoid the crash, but after receiving “several” visual warnings and one audible warning to place his hands on the wheel, he did not.
Tesla recalls Model S cars
The automaker also announced that it is voluntarily recalling 123,000 Model S cars built before April 2016 to replace the power steering bolts. Nomura Instinet analyst Romit Shah said in a note this week that he expects the impact from the recall to be “relatively minor, if not borderline insignificant.” He describes himself as “cautiously optimistic” that neither the recall, nor the deadly Model X crash will have any serious negative implications for what the company is doing. As a result, he maintained his Buy rating and $420 price target on Tesla stock, adding that he sees the recent volatility as an opportunity to buy shares.
Baird analyst Ben Kallo, a long-time bull on Tesla stock, also sees the recent pullback in Tesla stock as a buying opportunity, adding that long-term bulls have benefited from taking advantage of such opportunities in the past. He thinks sentiment on the company is just too negative and that it might be able to surpass the Street’s lowered expectations when it reports first-quarter delivery numbers this week.
Jefferies analysts actually upgraded Tesla stock from Underperform to Hold in a note on Monday. They expect the automaker to start repairing its reputation soon. Analyst Philippe Houchois seems focused on the company’s credibility and reputation, emphasizing that he believes the company will “take more drastic action on guidance and funding to restore credibility.”
Tesla in need of reputation repair
However, Tesla CEO Elon Musk did little to repair Tesla’s reputation over the weekend, as he used Twitter to make a joke about the automaker filing for bankruptcy. It was undoubtedly a response to the previous comment from Vilas Capital Management, which has been shorting Tesla stock for quite some time. Vilas sees bankruptcy ahead in as little as four months, and Musk decided to make a few jokes about it for April Fools’ Day:
There are many chapters of bankruptcy and, as critics so rightly pointed out, Tesla has them *all*, including Chapter 14 and a half (the worst one).
— Elon Musk (@elonmusk) April 1, 2018
Elon was found passed out against a Tesla Model 3, surrounded by “Teslaquilla” bottles, the tracks of dried tears still visible on his cheeks.
This is not a forward-looking statement, because, obviously, what’s the point?
Happy New Month! pic.twitter.com/YcouvFz6Y1
— Elon Musk (@elonmusk) April 1, 2018
When Brian Sozzi of The Street called out Musk’s bankruptcy jokes, fans of the celebrity CEO quickly came to his rescue, saying that more executives should act like him.
@elonmusk breaks the mold and takes the tension out. It’s not easy changing the world(s), and we all need space to make mistakes.
— Steve Lasker (@SteveLasker) April 2, 2018
Tesla stock initially plunged nearly 8% in early trading today, falling to $244.59 before hitting a floor and bouncing, although it remains in the red as of the time of this writing.