Tesla Inc. Chief Executive Officer Elon Musk warned in an internal email his company’s rallying shares could get “crushed” if investors start to worry about the electric-car manufacturer’s ability to deliver on profit expectations.
Musk urged employees to stay focused on cutting costs and prevent a reversal in Tesla’s soaring stock price in an email sent Tuesday to employees as the Palo Alto, California-based company works to meet a target of delivering half a million cars this year.
“When looking at our actual profitability, it is very low at around 1% for the past year. Investors are giving us a lot of credit for future profitability, but if, at any point, they conclude that’s not going to happen, our stock will immediately get crushed like a souffle under a sledgehammer!” Musk wrote in the email viewed by Bloomberg News.
The carmaker’s stock has skyrocketed almost 600 percent this year, in part on expectations of joining the S&P 500 Index – which it will do on Dec. 21 – and of posting a fifth consecutive quarter of profit, which it did in October.
Musk and Chief Financial Officer Zachary Kirkhorn have been focused on cost reductions for several quarters even as Tesla spends billions on new factories in Austin, Texas, and Berlin to expand its global production and sales footprint.
“At a time like this, when our stock is reaching new heights, it may seem as though spending carefully is not as important. This is definitely not true!” Musk wrote in the email.