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I saw a headline pop up somewhere about Tesla stock crashing today. I don’t watch the stock closely or check it often. Once in a while, I take a peek to see what’s been going on. But when I see a headline like that, it catches my attention. I googled it and saw that it was down nearly 6% today. That’s not the biggest crash for sure, but it would seem to indicate something happened.
When I looked around, I saw that one of two things was probably the cause, or I guess both of them combined.
Tesla Finance & Business Operations Exec Resigns
First of all, Sreela Venkataratnam, Vice President, Finance and Business Operations, Tesla, resigned after 11 years in the company. Given her role at the company, it’s possible shareholders got especially spooked and thus sold some shares. It’s a good long post that you can read in full, especially if you’ve been following the company for that long. But here’s the paragraph toward the end that sort of explains why she’s leaving: “As I take a break to spend quality time with family, reconnect with old friends, and focus on personal well-being, I am energized for what lies ahead. When the time is right, I am hopeful that I will be fortunate to find another incredible opportunity like Tesla, where I can drive impactful change and contribute to a meaningful mission with exceptional people.” As is often the case, that’s a big vague, and we really don’t know why she’s resigning at this moment in time. Maybe she’s just ready for some time off. Maybe it’s something else.
Again, the only reason I really see this could have caused the drop in the stock price is due to the level and division she was at in the company.
Interestingly, in its story about this, Fortune highlighted the LinkedIn post another Tesla exec, Rich Otto, Head of Product Launches, published when he resigned in May. “Great companies are made up of equal parts great people and great products, and the latter are only possible when its people are thriving,” Otto wrote at the time. He then added that job cuts and changes in workplace culture had disturbed harmony at Tesla, pushing him to leave the company. That’s much more concerning than the almost entirely positive post from Venkataratnam. But, again, her position in the company is probably what spooked investors a bit today.
Tesla Semi Battery Fire
The other story that was making the rounds was one about a Tesla Semi battery fire. “A crash and large fire along a California freeway involving an electric Tesla Semi has drawn the attention of federal safety investigators,” AP writes. “The U.S. National Transportation Safety Board said Thursday it’s sending a team of investigators from the Office of Highway Safety mainly to look into fire risks posed by lithium-ion batteries.”
We’ve seen stories about Tesla battery fires for a decade. We’ve also pointed out that EV battery fires are much less likely than gasoline fires in conventional gas-powered cars. However, using that word again, they still spook some people, and, in this case, the fire took a long time to put out.
“The Los Angeles Times reported that the Tesla rig was traveling east on Interstate 80 around 3:15 a.m. Monday near Emigrant Gap, about 70 miles (113 kilometers) northeast of Sacramento, when it went off the road and collided with trees near the right shoulder.
“The battery caught fire, spewing toxic fumes and reaching a temperature of 1,000 degrees, forcing firefighters to wait for it to burn out, the Highway Patrol told the newspaper. The Tesla driver walked away from the crash and was taken to a hospital, and the freeway was temporarily closed.
“The battery burned into the late afternoon while firefighters tried to cool it down for cleanup, and the freeway didn’t reopen until 7:20 p.m., authorities said.”
I don’t think a fire alone would lead to a stock crash. However, stockholders might have gotten concerned about an investigation from the National Transportation Safety Board. I don’t know. I tend to think. it’s more the first story that people were responding too — and hence putting it first.
Tesla Stock Changes
For a little broader context on Tesla stock, though, let’s note how different timeframes look. In the past 5 days, the stock climbed a lot, and then crashed, resulting in almost no net change.
Going back a month, things don’t look as good, with the stock price down 14.5%.
However, going back 6 months, the stock price is up 6.7%.
But then, year to date, the stock price is down 15.2%. As always, TSLA is a volatile stock.
While temporary factors may make the stock go up and down, I agree with Elon Musk that anyone owning the stock today really has to believe in Tesla being an AI and robotics leader, and being able to financially take advantage of that in years to come, particularly with robotaxis and humanoid robots. Otherwise, it’s just hard to see how Tesla could rise to an order of magnitude more sales and justify a market cap that is several times higher than other automakers’, particularly those that sell many more vehicles than Tesla. In fact, Tesla’s market cap is comparable to the next several automakers’ market caps combined. Without faith in Tesla’s AI and robotics pursuits, one would have to be betting on a massacre of legacy automakers as we transition to EVs more and more as well as Tesla dominating the EV market globally in order to justify such a high market cap. I imagine Tesla’s stock will primarily hover around its current height, with swings here and there for fun, unless major investors start losing faith in Tesla’s new “core work.”
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