Elon Musk's Whiplash in Tone on Profit Sends Tesla Shares Sliding - EcoFinBiz Blog

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Elon Musk's Whiplash in Tone on Profit Sends Tesla Shares Sliding

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(Bloomberg) -- The Elon Musk who announced Tesla Inc. job cuts sounded a lot less bullish than the Musk investors have read or heard from lately.

The chief executive officer warned “the road ahead is very difficult” and said in a blog post early Friday that the company had no choice but to reduce headcount by about 7 percent. He prefaced his statement that Tesla may make a “tiny” profit in the first quarter with the word “hopefully” and said it could be achieved “with great difficulty” and “some luck.”

The comments sent Tesla shares plunging 13 percent, the biggest drop since the Securities and Exchange Commission sued him in September over his tweets about taking the company private.

Here are some of the more-positive statements Musk has made since last fall about Tesla’s earnings prospects:

3Q earnings shareholder letter (Oct. 24)

“Our earnings profile has flipped dramatically. Sufficient Model 3 profitability was critical to make our business sustainable -- something many argued would be impossible to achieve.”

3Q earnings call (Oct. 24)

“We expect to again have positive net income and cash flow in Q4. And I believe our aspirations I think will be for all quarters going forward.”

“I think we can actually be positive cash flow for all quarters going forward, leaving aside quarters where we may need to do a significant repayment; for example, in Q1 next year. But I think, even in Q1, I think we can be approximately flat in cash flow by end of quarter.”

2Q earnings call (Aug. 1)

“I really want to emphasize our goal is to be profitable and cash-flow positive for every quarter, going forward.”

“I feel comfortable achieving a GAAP income positive and cash flow positive quarter every quarter from here on out. That’s a -- there may be occasional quarters, where we pay back a big loan or something, where there may be just because we paid back a big loan. But absent that, it would be cash flow positive.”

To contact the reporter on this story: Craig Trudell in New York at ctrudell1@bloomberg.net

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Melinda Grenier

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