This content is from: Portfolio

Morning Brief: Shares of Tesla, Spotify Fall Sharply

The electric car maker and the streaming music service saw their shares slip in Thursday trading.

  • By Stephen Taub

Shares of Tesla fell 5.5 percent on Thursday, to close at $284.45, after the electric car maker posted its biggest quarterly loss ever, though one that was still smaller than analysts expected. However, investors were unnerved by comments made by founder Elon Musk on the earnings call. When an analyst asked him about capital requirements Musk snapped: “Next, next. Boring bonehead questions are not cool.” In response to another question, he responded “Sorry, these questions are so dry. They’re killing me.”

His testiness evoked memories of Enron chief executive Jeff Skilling, who in 2001 used vulgar language to respond to tough questions about its finances from Richard Grubman, the then managing director of Highfields Capital Management. Tesla remains the largest equity short, according to S3 Partners, a financial technology and analytics firm. Its short interest of $11.94 billion is $1.5 billion larger than number two Apple. One big beneficiary of the selloff was David Einhorn’s Greenlight Capital, which is famously short the stock.

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Shares of streaming music giant Spotify fell 5.7 percent, to close at $160.38, after it missed estimates in its first earnings report since going public last month. According to the company’s filing, when it went public, Chase Coleman’s Tiger Global Management owned more than 12.8 million shares, or 7.2 percent of Spotify’s total ordinary shares. Most of the shares were owned by Tiger Global Private Investment Partners IX, L.P. (PIP IX).

In its first-quarter letter, dated April 30, Tiger Global discussed the investment, saying its hedge funds purchased 0.5 percent of the company at roughly $107 per share. It also said the company represents the largest investment in its ninth private equity fund, which it explained put Tiger Global Investments, its long-short funds, in a position to buy additional shares while the company was still private.

“Streaming music providers have singlehandedly reversed a multi-decade trend of recorded music industry declines, and Spotify is the clear market leader, creating value for artists as well as record labels and offering a superior product for users,” it explained in the letter. Altogether, Tiger Global said it owns roughly 7 percent of the company. “We are excited to be long-term shareholders,” it added.

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Credit Suisse raised its price target on fracking giant Pioneer Natural Resources, from $235 to $245, after the company reported first-quarter results that beat expectations. The bank said in a note to clients that the company is improving its capital efficiency even though it is boosting capital expenditures. This is another stock famously shorted by Greenlight Capital. The stock, however, fell 2.2 percent on Thursday, to close at $192.14.

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O. Andreas Halvorsen’s Viking Global Investors has invested about $15 million in Birchbox, the struggling beauty startup, according to Techcrunch.com. As a result, the hedge fund is the majority owner. The company had been put on the acquisition block. Back in 2014, Viking led Birchbox’s $60 million funding round.

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