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Tesla stock plunged 9 percent on Friday after a bizarre podcast in which CEO Elon Musk smoked weed and sipped whiskey, and two high-profile executives abruptly announced they were leaving the company.
Musk has found himself at the center of a lot of buzz in recent months, including some questions about whether he’s been using drugs — legal or illicit — and he may have provided the answer himself during a Thursday night podcast by comedian Joe Rogan. Musk smoked what Rogan described as a joint containing a mix of marijuana and tobacco.
“I’m not a regular smoker of weed,” the Tesla chief executive told Rogan and his podcast listeners.
The U.S. Air Force launched an investigation into the matter as Musk’s SpaceX has multiple high-value contracts with the military branch, CNBC reported on Friday.
The episode quickly added to the growing controversy over the South African-born executive’s behavior in recent months and increased concerns that Musk might be using other drugs. In an emotional August interview with The New York Times last month, the CEO said he was working as many as 120 hours a week, admitting that friends were worried he was facing exhaustion. The Times also quoted sources claiming that some members of the Tesla board were worried about Musk’s use of the sleeping drug Ambien.
Then, last month, rap singer Azealia Banks, a friend of the singer Grimes, whom Musk has been dating, claimed in a tweet that she saw Musk high on LSD at the time he tweeted about taking Tesla private.
That short-lived plan has triggered an SEC investigation, as well as at least two lawsuits filed by short-sellers who claim it resulted in losses of hundreds of millions of dollars.
Whether Musk has been using drugs, is suffering from exhaustion or, in his words, is struggling through an “excruciating” time of his life, his behavior is raising flags — and also appears to be contributing to the growing loss of talent at the California carmaker.
Over the summer, Tesla’s head of engineering, Doug Fields, someone Musk once described as “one of the world’s most talented engineering execs,” unexpectedly quit.
Now, two other key executives, including human resources head Gabrielle Toledano and Chief Accounting Officer Dave Morton, are out the door. Morton’s departure was particularly surprising considering he joined Tesla only a month ago — a day before Musk’s infamous tweet suggesting he had “funding secured” to take the carmaker private.
Though Morton said “I believe strongly in Tesla,” in a regulatory filing released Friday, he also noted that, “Since I joined Tesla on August 6th, the level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations.”
Later on Friday, Musk announced a series of promotions to fill a variety of open positions including president of automative and vice president of people and places.
Musk has never been shy about public exposure. Like President Donald Trump, he is fond of expressing himself on Twitter but, much like the president, those tweets haven’t always generated the response he apparenttly expected.
Two months ago, Musk got into a flame-war with Vernon Unsworth, a British diver who helped rescue a youth soccer team from a flooded Thai cave. The Tesla CEO had offered to send a mini-submarine to assist in the rescue, something Unsworth dismissed as a publicity stunt. The dispute quickly escalated, with Musk referring to the diver as “pedo guy,” slang for a pedophile. Unsworth threatened to sue and Musk subsequently apologized. But in an unexpected turn this week, Musk revived the dispute, this time referring to Unsworth as a “child rapist,” and urging him to sue.
“Musk will be sued — not because of his hopes, but because he deserves to be sued,” responded the diver’s attorney, L. Lin Wood, adding that “Elon Musk’s ongoing campaign of publishing vile and false accusations against Mr. Unsworth is outrageous.”
Musk has been picking other fights, deriding the media and, during a May conference call to discuss first-quarter earnings, cutting off several analysts, dismissing their questions as “boring.”
Musk’s irreverent behavior has been seen by many of his followers as refreshing. But it is beginning to take its toll on the car company he helped found. The company’s stock has always been volatile but it has grown even more so, bouncing sharply, up or down, after many recent tweets. It neared a record after Musk posted about taking Tesla private, then fell by double digits just days later. This week, it took another fall as Musk renewed his attack on Unsworth. At the same time, its high-yield bonds tumbled to record lows.
But Tesla has a history of bouncing back, and there were signs this week that investors are being buoyed by increases in production at the company’s Fremont, California, assembly plant — and the announcement, by Musk, that Tesla’s three product lines were the three best-selling EVs in America last month. That gives the CEO credibility on what matters most to many investors: his promise of profits for the second half of 2019 after years of heavy losses.
But not everyone is calmed by those numbers. Funds run by Black Rock voted in favor of a recent shareholder proposal that would have required the carmaker to appoint an independent chairman. The measure failed to pass.
Meanwhile, Tigress Financial Partners analyst Ivan Feinseth told Reuters that Musk “should not tweet about things outside of car production and the auto industry.”
Referring to the SEC probe over the aborted privatization plan, Feinseth added that “the board, even though it is friendly to him, has now been put in a position where the internal governance of the company has been questioned.”
While a sip of whiskey and a hit off a joint may be precisely what some executives need after a tough day at the office, Musk’s behavior appears to be making things tougher for himself, and for Tesla.
CORRECTION (SEPT. 7, 2018, 11:55 A.M. ET): An earlier version of this article misspelled the first name of the comedian who hosted the podcast. He is Joe Rogan, not Josh.