By Parke Shall
Tesla (NASDAQ:TSLA) executive turnover has been a point of concern over the last year. About 12 to 18 months ago, executives started leaving the company in droves, a phenomenon that we have been documenting in a series of articles continually explaining why we believe the turnover to be more and more alarming with each executive that leaves.
Up until this point, executive turnover has consisted mainly of some second tier and third tier employees. However, the departure of the company's most recent chief financial officer and the details disclosed about the timing of his exit in an 8-K filed today can only be described as alarming. Why? It doesn't add up.
There was an 8-K filed on Friday afternoon that talked about the details of the latest CFO's departure. Among other things, the 8-K stated that the chief financial officer decided he was going to depart just one day prior to the earnings report being released (our emphasis on the date).
On February 21, 2017, Jason Wheeler, Chief Financial Officer of Tesla, Inc. (the " Company "), notified the Company that he is resigning as the Company's Chief Financial Officer, effective following the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2016. Mr. Wheeler will remain at the Company through early April to ensure a smooth transition.
We find this timing to be extremely unusual and very abrupt. Rather than give an excuse like a personal emergency or something that could arise without warning and require a very quick exit, he had instead explained on the conference call that the reason he was leaving was to work in the public sector. He stated:
It's been a great ride and I'm really going to miss working with all the wonderful people at Tesla. This is an A team and when I walked in the door, I was very passionate about the mission of the company. And today, I'm even more passionate than I was on the day I walked in. And I think it's also important to say, that I'm looking to scratch an itch that I've had for many, many years now. I'm going to go do something in the public sector, but I wouldn't have felt comfortable about leaving if we didn't have a really good plug-and-play solution in place for the company. And I think with Deepak's history here, on the verge of bankruptcy and everything that he's gone through, he's well positioned to
This departure and the circumstances surrounding it can only be described as bizarre. We are not going to try and speculate as to what the real intentions of the CFO, as it is not our business to try and guess. However, what we will state is that the timing and reasoning behind this departure tell us everything that we need to know.
For months, we have speculated that there may be some potential communication issues or "tone at the top issues" that could be costing the company morale and causing executives to want to find greener pastures. This resignation, coming after a long line of resignations, can only appear to be a red flag to us and his half-fasted explanation should appear that way also. There isn't a "normal" story that we would buy as to his departure with the exception of something that came up imminently. His explanation (or lack of one) clearly is at odds with that.
We have been Tesla skeptics for quite some time now and continue to be skeptical of the company though we currently have no position.
We think the company is going to continue to face extraordinary challenges when it comes to capitalizing the business in the future and it is not a stock that we would want to own heading into the middle of 2017. With the unusual departure of the CFO, combined with the fact that the company is going to be needing to raise more capital, we believe Tesla may have both short-term and long-term pressure downward.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.