Tech

Tesla stock drops as Elon Musk gives bizarre earnings call

Key Points
  • Tesla stock dropped more than 5% in after-hours trading as executives cut off Wall Street analysts in an earnings call dubbing their questions on Model 3 gross margins "boring."
  • CEO Elon Musk took several questions, instead, from Gali Russell, a 25-year-old retail investor in Tesla and Youtuber.
Tesla's shares drop as Musk gives bizarre earnings call
VIDEO2:4302:43
Tesla's shares drop as Musk gives bizarre earnings call

Shares in Tesla took a nosedive in after-hours trading today as Elon Musk cut off analysts during a first-quarter earnings call. He dismissed a question about gross margins from Bernstein senior analyst Toni Sacconaghi as "boring." Instead, Musk and other executives answered multiple questions from a Tesla enthusiast and Youtuber named Gali Russell.

The 25-year-old retail investor tweeted at Elon Musk on Monday, seeking to ask him a "crowdsourced" question during Wednesday's conference call. Instead of a single question, Russell was able to ask several.

The stock drop may have become apparent around the time when Musk cut off analysts on the call. However, the company's first-quarter update has also stoked concerns over Tesla's cash burn and how, exactly, it will improve margins while ramping Model 3 production.

On the first-quarter call, CEO Elon Musk also promised a "reorganization" this month. He said:

"I'm feeling quite confident about hitting positive cash flow in Q3. This is not a certainty. It does appear quite likely in my view. We are going to conduct a reorganization, restructuring of the company this month and make sure we are well set up to achieve that goal. In particular the number of third-party companies we're using has gotten out of control. We're going to scrub the barnacles on that front."

Tesla's earnings were better than expected, but Elon Musk still has a lot on his plate
VIDEO5:3105:31
Tesla's earnings were better than expected, but Elon Musk still has a lot on his plate

In answering questions from Gali Russell, Musk also revealed that Model Y production is not expected to begin for another two years, and that the vehicle won't be produced at Tesla's main, Fremont, Calif. factory.

Musk said, "We will not be starting production of the Model Y at the end of next year. It's probably closer to 24 months from now, 2020... We could not fit the Model Y production at Fremont. We're jammed to the gills here. One thing I know for sure is it's not here."

Musk's own compensation is tied to Tesla's stock price.