Tesla Slumps as Morgan Stanley Sees Musk Alienating Wall Street

(Bloomberg) -- Tesla Inc. shares fall 5 percent in pre-market trading after CEO Elon Musk went off-script in what Morgan Stanley analyst Adam Jonas called the “most unusual call I have experienced in 20 years on the sell-side,” noting it could jeopardize the company's relationship with the capital markets needed to fund future plans.

Musk's impatience with “boring” analyst questions around capital plans, cash burn and Model 3 order configuration led him to take questions from a blogger instead, sending shares lower in post-market trading. The move may prove to be “a mistake” given the importance of the Model 3 build out, said Jonas, who rates the stock equal-weight with a price target of $376. Shares traded below the $287 level at 7 a.m. in New York.

“Even the short-term cadence of Model 3 production can significantly impact cash levels, liquidity and financial credit worthiness,” Jonas said. “More than any other factor, the path of the Model 3 can determine whether the stock could test our $561 bull case or fall below our $175 bear case.”

Musk on Wednesday's call said he was opposed to future capital raises, denying the company needs or wants to raise cash, even as the automaker burned through $1 billion in cash in the first quarter.

To contact the reporter on this story: Courtney Dentch in New York at cdentch1@bloomberg.net.

To contact the editors responsible for this story: Chris Nagi at chrisnagi@bloomberg.net, Steven Fromm

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