Tesla Announces Management Shuffle as Stock Slides, Bonds Sink to Record Low
Elon on the hot seat again.

Tesla (TSLA) shares tumbled on Friday and its bonds are tanking as some executives head for the exits and others get promoted. 

Tesla's $1.8 billion of 5.3% bonds, due in 2025, plunged on Friday, hitting a low of $81.75 apiece after the electric car maker's Chief Accounting Officer, David Morton, and its human resources chief, Gabrielle Toledano, both said they were quitting. Morton had been in his job less than a month and Toledano decided not to return after taking a leave of absence.

After the market closed, Elon Musk announced in a company blog post that Tesla is promoting Jerome Guillen to President, Automotive, overseeing automotive operations and program management. Kevin Kassekert has been promoted to VP of People and Places from VP for Infrastructure Development. Chris Lister has been named VP, Gigafactory Operations; Human resources director Felicia Mayo has been named a vice president, and Dave Arnold is a new senior director for Global Communications.

Tesla's bonds have been falling since Monday, after Goldman Sachs downgraded the stock, citing increased competition in electric vehicles and cash flow concerns. The bonds are rated B-/Caa1. 

Tesla shares ended Friday down about 6.5% to just above $262 a share. They were rising about 0.7% to $265 in after-hours trading, however.

Morton and Toledano are bailing out just two months after a group of other executives, including Lenny Louis, general manager of its Canada operations, Deputy General Counsel Jeff Risher, and vice president for U.S. energy sales Bryan Ellis, all left in July.

Morton said in a filing with the Securities and Exchange Commission, "Since I joined Tesla on August 6th, the level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations. As a result, this caused me to reconsider my future. I want to be clear that I believe strongly in Tesla, its mission, and its future prospects, and I have no disagreements with Tesla's leadership or its financial reporting."

The departure of Morton, a former chief financial officer for computer-drive maker Seagate Technology Plc, may raise more concerns about the the company's credit. 

One analyst speculated Morton has seen things on Tesla's books non-insiders wouldn't be privy to. "He's seen things none of us have seen, and he's leaving after a month," Gordon Johnson of Vertical Group told TheStreet. "He (Morton) might say 'I'm questioning these numbers,' and as a result, he decides to leave." Johnson, who has an $88 price target on Tesla, believes "They're {Tesla}, in our view, taking costs out of Tesla and putting them into 'services and other,'" he said. "That's what investors are looking at - their automotive margins." 

Others don't agree. "If they leave with account-honesty issues, they usually don't take that extra step to say that the accounting is fine," Gene Munster, former tech analyst, co-founder and managing partner of venture capital firm Loup Ventures told TheStreet. "The one question it does raise; did the accountant see something longer-term saying it wasn't going to be sustainable, that the company wasn't going to make it long-term," he said. "It's a black eye for accountants if they're involved with a company that doesn't make it."

Aside from accounting, and aside from the company's growth prospects, Morton's resignation could be a mere reflection of what many already believe is true; Musk isn't an easy person to be around. "I think the reason why he left is because Elon can be tough to work for," Munster said. Musk's personality could be acting as an impediment to what has been Tesla's life-line: debt. "They need to have a strong leader that can go out and raise money," Munster said. "Elon, the way he is acting, they're not going to be able to raise money." 

Johnson agrees the company's cash flow is in serious jeopardy. "The company needs money, and if their ability to raise money is compromised, the point at which they can't operate anymore is near," he said. 

Goldman Sachs downgraded Tesla this week, giving it a six-month price target of $210 a share, roughly 20% below its current level. "With looming maturities on convertible debt, we believe the company would likely need to come back to the capital markets in first-half 2019," the Goldman Sachs note said. Tesla has $920 million of debt due in March of 2019, and many credit analysts say another debt raise would be credit negative. 

"Creditors have closely been monitoring the company's narrowing liquidity position," S&P Global Market Intelligence wrote in a note. 

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