Date
16 October 2018
Tesla CEO Elon Musk's apology was  well received by the market: the company’s share price soared, adding about US$7 billion to its market value. Photo: Reuters
Tesla CEO Elon Musk's apology was well received by the market: the company’s share price soared, adding about US$7 billion to its market value. Photo: Reuters

Elon Musk’s multibillion-dollar apology

Tesla’s shares surged last week after the electric car maker released its not particularly strong quarterly results, thanks to chief executive Elon Musk’s apology to analysts he had previously mocked.

The company posted a 43 percent revenue growth to US$4 billion for the second quarter, marginally beating the average market estimate of US$3.96 billion.

Losses, however, expanded 113 percent to US$720 million, more than the expected US$690 million.

In a conference call, Musk surprisingly apologized to the two analysts he scorned three months earlier for asking “bonehead” and “dry” questions during a previous earnings call.

“I’d like to apologize for, you know, being impolite on the prior call. Honestly, I think there’s really no excuse for bad manners,” he said. “There are reasons for it in that I’d gotten no sleep, and been working sort of 110-hour, 120-hour weeks.”

This time, he answered all questions raised by analysts, and even allowed reporters to ask questions.

Morgan Stanley analyst Adam Jonas said: “Elon suddenly gave us so much love and respect, and that’s so exciting. What can I say?”

Generally speaking, Musk did not provide any specific good news during the call. But his apologies were well received by the market. Tesla’s share price soared, adding about US$7 billion to its market value.

Musk is known to sleep on the factory floor and work 120 hours a week to ensure smooth production. But his offensive remarks three months ago stoked concerns about his capability to get things under control.

As such, his display of good manners in the latest earnings call somehow signaled to analysts that things are back on the right track.

His efforts to improve his relationship with Wall Street could also pave the way for Tesla to raise more capital, should there be such a need.

Although it is sometimes hard to say you’re sorry, an apology is still the most powerful way to resolve a conflict, according to a study released by the University of Pittsburgh.

This article appeared in the Hong Kong Economic Journal on July 27

Translation by Julie Zhu

[Chinese version 中文版]

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RT/CG

Hong Kong Economic Journal columnist

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