Tesla Inc. (TSLA) extended declines Monday, taking shares to a six-month low, as investors continue to question the near-term fate of the clean-energy carmaker amid a series of headline risks linked to its billionaire founder and CEO, Elon Musk, and the group's ability to maintain production and delivery targets while it attempts to slow the rate at which it's burning cash in order to achieve them.
The stock was further pressured by comment from a key short-seller, the Greenlight Capital hedge fund, which compared Tesla's woes to the final days of Lehman Brothers. The stinging criticism followed shortly on the heels of yet another questionable decision from Musk, who appeared to mock the Securities and Exchange Commission on Twitter just hours after U.S. District Judge Alison Nathan asked both Musk and the SEC to justify their $40 million weekend settlement over Musk's infamous 'take private' Tweet from August 7. Greenlight's influential boss, David Einhorn, said Musk's conduct "suggests that he is doing his best to be relieved of his position as CEO to avoid accountability" for the group's underlying performance woes.
"Like Lehman, we think the deception is about to catch up to (Tesla)," Greenlight said in a quarterly investor letter first reported by Reuters. "Lehman threatened short sellers, refused to raise capital (it even bought back stock), and management publicly suggested it would go private. Months later, shareholders, creditors, employees and the global economy paid a big price when management's reckless behavior led to bankruptcy."
"Elon Musk's erratic behavior suggests that he sees it the same way," the letter noted.
Tesla shares were marked 4.4% lower at $250.22 each by late morning in New York, bouncing modestly from a session low of $249, the lowest since March 29, and some 35% south of the August 7 peak, which following Musk's now infamous Tweet that suggested he had "funding secured" to take the company private at $420 a share.
Musk's SEC-mocking Tweet wasn't his only social media mis-step of the week, as well, as the billionaire pressed the case that short-selling of stock should be illegal -- while hitting out at the investment giant BlackRock (BLK) -- arguing there is "no rational basis for a long holder to lend their stock to shorts, as it dilutes the shareholder base & gives the short a strong incentive to attack the company by whatever means possible, including regulators."
The Tweets appeared to challenge at least one portion of the proposed SEC settlement, which deems that Musk's social media activity, as well as his communication with investors, is subject to oversight from the Tesla board.
"We think it's very unwise -- he's already on thin ice with the SEC," commented Garrett Nelson, an analyst at CFRA Research, about Thursday's apparent jab from Musk.
Nelson said that the tweet itself is unlikely to result in any additional action from the SEC, but noted that the recent settlement isn't Tesla or its CEO's only entanglement with the agency: The SEC is also looking into whether Tesla misled investors in reporting the extent of its Model 3 production issues, a probe that predated the go-private fiasco.