Disclaimer: the views presented in this article do not necessarily represent the stance of the Junior Economic Club of Toronto as a whole.
With the continued issues Tesla faced over the past month, things are only getting worse for the electric car company after CEO Elon Musk’s decisions during a podcast show interview.
During the airing of the daily Joe Rogan Experience podcast episode this past thursday, the popular CEO made an appearance as a guest, sipping whiskey and talking about flamethrowers, artificial intelligence, and electric planes. At one point, the topic of conversation became marijuana, the controversial drug that isn’t legal in all American states yet. Musk received the joint and took a puff, while claiming that he doesn't regularly use the drug. Though recreational use of marijuana is legal in California (the state where the podcast was made), the controversy surrounding the use of the drug still seems very unprofessional for a CEO to do on camera. Under federal law, marijuana is still illegal.
In the past few months, Musk’s behaviors have been repeatedly criticized. As of right September 14th, Tesla’s stock has plunged almost 120 points, more than 30% since Musk’s first announcement of Tesla’s privatization, which he later took back due to widespread public outrage, lawsuit threats from market manipulation, and investigations by the SEC. This time, within hours of release, the podcast went viral, and Musk once again received tremendous backlash. Now, in addition to their CEO, Chief Accounting Officer Dave Morton and Head of Human Resources Gabrielle Toledano are also making headlines due to their sudden resignations, which can only mean further declines for Tesla.
Tesla’s quarterly reports have been showing growth, though. Quarter 2 shows more than $4 billion in revenue, as compared to the $2.78 billion to quarter 2 of last year. However, Tesla’s financing and spending is quickly catching up as well. Tesla reported a $718 million loss, but they still have a positive cash flow. Unfortunately, with Model 3 production being pressured as much as possible and research happening with the Model Y, that could soon change, especially if Tesla keeps up their money-burning habit. Especially with the PR damage done by the CEO, things aren’t exactly looking bright right now for Tesla.
At the end of the day, this is another example of how severely the actions of the CEO reflect on a company, despite its great efforts to retain its public image. For Tesla, if Musk doesn’t change his strikingly odd behavior soon, they’ll need more than a positive cash flow to keep them afloat.