Ignore the Elon Musk Meltdown and Watch the TSLA Bond Market

Over the last few days, Elon Musk piled on the crazy by doubling down on his pedophile accusations against one of the British divers involved in rescuing the Thai football team that was trapped in a cave, then by smoking marijuana live on the air during a radio interview. In response, Tesla’s stock (TSLA) has been in what Forbes calls, “freefall” … but that’s not the most worrying thing. The bond price is.

I’m no expert on stocks and bonds and markets, so I’ll simply quote Forbes’ Daryl Jones, below, as he seems to sum it up rather nicely.

 

Tesla’s stock has been in freefall since Musk’s now infamous “Funding Secured” tweet about taking the company private at $420 per share. The larger concern however is in the bond market. The $1.8 billion 5.3% bonds that Tesla issued a year ago have now hit 84 cents on the dollar and are yielding 8.4%.

Meanwhile, Tesla 7-year CDS (indicative of the cost to insure against default) has jumped meaningfully in the last month to an all-time high of more than 665 basis points. While the equity market often trades on investor emotion and psychology, the bond market tends to be more rational and focus on the actual fundamentals and cash flow.

 

As for what that means for Tesla and Elon Musk in the longer term, it’s hard to say. What’s clear, however, is that Tony Stark wanna-be TSLA CEO Elon Musk seems to be cracking under the pressure of bringing his electric vehicle company up to profitability. That can be seen in his erratic behavior towards contractors, his rants against private citizens, his (probably illegal) tweets about funding to bring the company private, and– of course– his willingness to call media darlings pedophiles in a public forum again and again.

 


 

As far as the marijuana use goes, while not the cultural taboo it once was, it was certainly a stupid PR move for an embattled CEO who is trying to convince investors he has their best interests at heart. But maybe I’m the only one who sees all this as evidence of the insecure nerd lurking underneath Musk’s carefully cultivated “cool guy” persona and this is all just part of the 10-dimensional chess game he’s playing with the ghost of Henry Ford (or whatever).

What do you guys think? Is ol’ Musky losing his gourd, or is the guy justified in feeling like he can say and do whatever he wants because he’s Elon Motherf***ing Musk? Let us know in the comments section at the bottom of the page.

 

Elon Musk Smoking Marijuana on the Air

Sources | Images: Forbes, TechCrunch.

 

Jo Borrás

I've been in the auto industry 1997, and write for a number of blogs in the IM network. You can also find me on Twitter, at my Volvo fansite, or chasing my kids around Oak Park, IL.