It’s been a tumultuous couple of months for serial entrepreneur and philanthropist Elon Musk.
Tesla stock plummeted by over $17 per share on Sept. 7 following Musk’s appearance on the “Joe Rogan Experience” podcast.
Host Joe Rogan gave Musk a chance to wax eloquent on some of his future potential projects, including an electric VTOL (vertical take-off and landing) plane, a computer-brain interface Musk referred to as Neuralink and the future of sustainable energy.
The interview concluded with Rogan and Musk sharing a “spliff” (marijuana and tobacco cigarette), once Rogan assured Musk that weed was legal in California.
Rogan’s assurance aside, the six percent single-day drop in share prices is likely due to Musk’s use of illicit drugs according to Weber State University Interpersonal and Family Advisor, Brent Warnock, who makes his living in the stock market.
“Elon Musk is Tesla. It’s Elon. Period.” said Warnock. “A drop of that significance only happens occasionally, and it’s only with company news: earnings reports every quarter. If they meet or miss expectations, you can have a six percent swing. Otherwise, a six percent swing is unheard of for a regular business day.”
Above and beyond the state-level legality of cannabis, as a contractor Musk is subject to federal restrictions. According to a CNBC military source, Musk’s podcast cannabis session may end up costing him a number of Air Force contracts with SpaceX. The United States government prohibits any personnel with a security clearance from the use of illicit drugs.
Musk may have also violated his own company’s standards. Tesla’s Health and Safety section of its Code of Business Conduct and Ethics promises each employee a “safe and healthy work environment” and encourages each employee to report any unsafe behavior, specifying “use of illegal drugs.”
Regardless of legal or ethical violations, Musk represents an entire company, and public relations student Parker Crawford posits Musk is doing an effective job at keeping people talking about Tesla.
“While some of the things (he does) might be boneheaded in some peoples’ view, the bigger thing is that he’s getting things out there. PR, whether it’s negative or positive, is PR. It’s going to get your name out there,” said Crawford.
PR student Tim Romney says Musk is too risky to consider a prospective employer.
“He’s the face of the company, and the way that he acts he’s not someone I’d want to represent. I know that in PR, there’s always going to be the negative and the positive … and it’s just getting harder and harder for those executives to cover his tail,” said Romney.
Romney’s views may not be far off: two more Tesla executives, the chief accounting officer and human resources chief, have announced their departure from the automobile manufacturer. Dave Morton, who acted as Tesla’s chief accounting officer, had only been in his position for a month.
The executives’ resignations came on the heels of an “Electrek” report claiming that Tesla not only failed to meet their Model 3 production goal of 6,000 vehicles per week by the end of August, but is struggling to reach 5,000 cars per week.
Tesla is known for a comparatively high turnover rate, but 2018 alone has marked the departure of 41 executives according to a CNBC report. This number doesn’t include roughly nine percent of its workforce laid off in June.
This type of turnover is extremely uncommon for top-level executives in other well-established companies, according to Associate Professor Dr. Randy Boyle at the WSU Goddard School of Business and Economics.
“You’d never see this type of turnover in a traditional automobile manufacturer. Why would good smart people that know the most about a company all quit en masse? That’s the literally multi-billion dollar question.” said Boyle.
Boyle went on to say that Apple is the perfect foil for a company like Tesla. Steve Jobs was undeniably the face of Apple the same way Musk is for Tesla. People who worked at Apple, according to Boyle, were often scared of Steve Jobs; but you never saw the same large number of departures.
“You look at Steve Jobs, and he was a fairly turbulent personality. The boards, and some of the smart people around him, disagreed with what he was doing. But it turns out he was right, and he created the most valuable company in the world, hands down,” said Boyle.
Boyle believes the key difference is stability. Because of the volatile nature of the industry in which Tesla operates, everyone’s looking at Musk for stability as the physical representation of the company. If he appears unstable, Tesla appears unstable.
In an Aug. 16 interview with the New York Times, Musk spoke about how exhausting this past year has been for him, the family obligations he’s nearly missed and the 120-hour work weeks he’s put in to try to ensure the future of his companies.
Musk’s emotional turbulence was due in no small part to his attempt, according to the interview, at complete transparency. Musk was referring to the Aug. 7 tweet in which he announced, “Am considering taking Tesla private at $420. Funding secured.”
The funding Musk was talking about, according to the interview, was a potential investment brought up in talks regarding a $250 billion fund within the Saudi Arabia government.
The tweet, which incited a surge in share prices of more than 13 percent, has prompted an SEC investigation according to CNBC, seeking to determine whether Musk used the tweet as a method to burn out short-sellers.
Traders, who ended up losing more than $1.3 billion, are now filing lawsuits against Musk based on similar claims.
On Aug. 24, Musk tweeted a link to a Tesla blog post, in which he clarified the future of the company.
“Given the feedback I’ve received,” Musk wrote, “it’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company … I met with Tesla’s Board of Directors yesterday and let them know that I believe the better path is for Tesla to remain public. The Board indicated that they agree.”
Warnock suggested that Tesla needs some serious help in managing their future.
“The whole company has a big problem,” said Warnock. “There have been a lot of analysts who say that Tesla is ‘un-investable’ until Elon Musk either steps down, or he gets some help in there so he’s not the sole face of this company.”
According to the New York Times interview, those members of the board are currently searching for an executive to help relieve some of Musk’s intense workload.
As far as Warnock is concerned, however, the bottom line is Musk needs to stop acting like the CEO of a private company.
“When you’re the CEO of a public company with public shares, which Tesla is, he doesn’t work for himself,” said Warnock. “This is not his company anymore, this is a public company. This is for shareholders, he works for them. He has forgotten that.”