Elon Musk’s Interview with the NYT Had This Weird Effect Over the Weekend

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Last week, the New York Times published transcript excerpts of an interview with Tesla CEO Elon Musk. But rather than help gain sympathy for one of America’s leading entrepreneurs, the news aided in pushing his company’s stock value downward. Why did that happen?

To offer a background to this story, it’s not news to anyone that Musk works harder than most CEOs. Not many CXOs sleep at their factories…well, at least not once their company is posting revenues in the billions of dollars, I would think. But his revelation of a 120-hour work week seems to have shocked many. Not only that but his admission of “sometimes” taking Ambien was blown completely out of proportion, with even respectable analysts and journalists saying he was ‘relying’ on them.

But what I’m really after is the stock drop. When Musk revealed the take-private deal on August 7 in a tweet (which he admitted no one reviewed or even saw), he must have known that it would rock the market, possibly even cause NASDAQ to halt the stock from trading any further. That’s exactly what happened. Now, what this implied was that a $420 per share offer would have no longer been a 20% premium to the stock price, which spiked to a high of nearly $380.

On Friday, Aug 18, however, after the interview was published and the media created a storm in a teacup about Musk’s physical and mental health, the stock closed at $305.50. That tends to happen when the CEO of a public company paints a gloomy picture of his personal situation. However, that revelation had nothing to do with the operations of Tesla, which are on a rising slope along with escalating Model 3 production.

The timing was perfect, though, because his offer of $420 at the current share price of $305 is a 40% premium. Not a bad deal for an investor looking to cash out of Tesla. Now look at $TSLA pre-market, as of this writing:

$295.23 – Last Updated: Aug 20, 2018 at 7:19 a.m. EDT on MarketWatch

The market seems to have taken its eye off the company’s recent successes with Model 3 production and rested it firmly on the negative coverage that Musk received after the NYT interview.

As Musk and the Tesla board go into their meetings with SEC officials this week, there are bound to be questions about his magic figure of $420, and specifics about the “funding secured” claim. The board and Musk have separate teams of advisors on this, so all that remains is to wait it out and see what comes out of the meetings.

The New York Times has re-covered the story, ending it with “It was a reminder that despite all their efforts to make the public believe otherwise, C.E.O.s have feelings, too.” More sympathy for Musk at this point might not be good for the stock, but it will be great for the shorts. A parting gift to the people who drove Musk to take the go-private decision, perhaps?