Tesla
stock dropped Monday. Unexpected and unexplained management turnover is the reason.
Chief Financial Officer Zachary Kirkhorn, who also held the title of Master of Coin, has stepped down after 13 years with the company and four as CFO. Chief accounting officer Vaibhav Taneja took over effective Friday Aug. 4, while Kirkhorn will remain at Tesla until year-end.
“Being a part of this company is a special experience and I’m extremely proud of the work we’ve done together since I joined over 13 years ago,” wrote Kirkhorn in a LinkedIn post. “As I shift my responsibilities to support this transition, I want to thank the talented, passionate, and hardworking employees at Tesla, who have accomplished things many thought not possible. I also want to thank [CEO] Elon [Musk] for his leadership and optimism, which has inspired so many people.”
The speed of the shift is one thing that might be unnerving investors. Another issue is that the reason for the change isn’t known. Tesla didn’t respond to a request for comment. CEO Elon Musk tweeted thanks to Kirkhorn Monday.
Whatever the reason, the shift is a surprise. Kirkhorn is respected by the investment community. Some even thought he could take on an expanded role in the future if Musk wanted to do less at the company.
Tesla stock finished at $251.45 on Monday, down 1%. The
S&P 500
was up 0.9% and the
Nasdaq Composite
gained 0.6%. The drop wiped some $7 billion off Tesla’s market capitalization.
“The oddest aspect of Zach’s resignation is the timing…most amicable resignations where a top exec has been at a firm for 10-plus years have a transition period,” said
Future Fund Active
exchange-traded fund (FFND) co-founder Gary Black. He speculated that Kirkhorn may have been thinking of leaving and that Musk didn’t take the news well. “Doubt it’s the upcoming cage match,” Black added.
Musk and
Meta Platforms
(META) CEO Mark Zuckerberg have spoken about potentially squaring off in a mixed martial arts fight.
Tesla is the only company in the S&P 500 that has shareholders talking about both MMA and management change. It isn’t a typical company. Musk also controls X, formerly called Twitter, SpaceX, and a few other companies.
Musk’s other interests are a reason that investors like management stability at Tesla, although they don’t always find it. Deepak Ahuja was CFO from 2008 through 2015, when Jason Wheeler took over. Wheeler left 14 months later to be succeeded by Ahuja, who served until Kirkhon took the post in early 2019.
Taneja, the former chief accounting officer, and new CFO, took the role in early 2019, succeeding Dave Morton, who took the job in August 2018 and left the next month. Morton said at the time that the job involved more public attention than he had expected and that he had no disagreements with Tesla’s leadership or financial reporting.
Many on Wall Street will weigh in on the latest switch. Baird analyst Ben Kallo wrote Monday the move didn’t change his opinion, saying Taneja is experienced and noting that he has been at Tesla for six years.
Kallo rates shares Buy and has a $300 price target for Tesla stock. Canaccord analyst George Gianarikas rates share Buy, too. His price target is $293 a share.
“We suspect the intensity of helping to build the sustainability behemoth alongside Mr. Musk may have led to Mr. Kirkhorn’s decision to move on from Tesla,” wrote Gianarikas in a Monday report.
Tesla stock is now up about 104% year to date, and up about 48% over the past three months. Shares are still down about 13% over the past 12 months.
Write to Al Root at [email protected]
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