Tesla Announces Biggest Ever Quarterly Loss, But Who Cares?

SpaceX Falcon Heavy launch and its hyperbolized influence on the Tesla Inc. share value 1 photo
Photo: SpaceX, modified
The thing with launching a car into space from the position of a private company is that you can do pretty much anything else afterward, and people will still be talking about that Roadster drifting away into the vastness of the universe.
Was Elon Musk aware of that when he scheduled the launch just before the financial report on 2018's first quarter? Well, yeah, of course he was - he's proven to be quite a clever fellow, I think we can all agree. The real question is whether it played any role in choosing the date or not.

Again, the Tesla CEO is under the suspicion of trying to shift attention from his company's terrible performance using extraordinary events. He did it before with the Semi and Roadster II launch last November when all eyes were on the slow Model 3 production, and he might have done it now as well.

But think of it this way: there are four quarters in a year (doh!), plus the odd situation or two when something goes horribly wrong, so Musk would have to pull at least four rabbits out of his hat each year. I mean, rabbits might be prolific breeders, but he's bound to run out at some point.

Yesterday, one day after the overwhelmingly successful Heavy Falcon launch, Tesla revealed it had suffered the biggest quarterly loss in its history ($675.4 million). These things usually lead to a drop in the shares value, as is only normal for a company that's never had a positive balance in its entire existence.

So, what happened yesterday? Well, nothing of the sorts. As you'd expect, the big rocket that had flown the other day didn't go unnoticed during the call with financial analysts as most of them were eager to congratulate Musk on his (other) company's achievement.

But those were humans, and humans tend to be impressed by loud things that go into space. How about the financial market itself? Tesla shares ended the day valued at $345.00, which was an increase of $11.03 - or 3.30 percentual gain.

That obviously goes against everything you might have been taught in school, and it goes to show just how important Musk's presence is for the Tesla brand. A feat performed by a totally different company that only has one thing in common with Tesla - their CEO - was enough to influence the share value of the latter positively the same day it posted a $675.4 million quarterly loss.

Do you think the Tesla board is in any rush to find a replacement for Musk as CEO of the company? No, we don't either. In fact, they had come up with a compensation plan for Musk just a few weeks ago that would keep him pinned in his job for ten more years. The catch? It is performance-driven, but if Tesla meets all the requirements, Musk will become the richest man in the world.

He might not have personal enrichment ambitions, but he has to be thinking about how nearly $100 billion would help his Mars colonization ambitions. Musk did touch on the subject during the call saying he doesn't intend to resign as CEO anytime soon, and even when he does, he'd like to stick around in product development.

So, if Musk is indeed a mastermind in timing important events to help maintain the company's share values afloat (or even boost them, as in this case), we'll be seeing more of it in the coming months because he's not going anywhere.

However, it's worth pointing out that this particular stunt could have been a double-edged sword. Had the Falcon Heavy launch gone awry - and with rocket test flights, that's always a possibility - Tesla's first-quarter loss would have appeared even more dreadful. So if it was a plot, it was a risky one that could have backfired just as well.

We always knew - and Musk made no secret out of it - that all three companies he's running share some of their knowledge to help each other out, but we never figured one's breakthrough could have an impact on the other at the stock market. And that's (one of the many reasons) why we're not CEOs.
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About the author: Vlad Mitrache
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"Boy meets car, boy loves car, boy gets journalism degree and starts job writing and editing at a car magazine" - 5/5. (Vlad Mitrache if he was a movie)
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