Wall Street Wary of Tesla's New 34-year-old CFO
Tesla’s stock price took a tumble after CEO Elon Musk announced, at the end of a Thursday night earnings call, that Chief Financial Officer Deepak Ahuja was heading into retirement.
Ahuja joined Tesla in 2008, 15 years after first joining Ford and becoming CFO of its AutoAlliance joint venture with Mazda. He then served in an identical role for Ford’s southern Africa region. At Tesla, Ahuja returned to the CFO role after a two-year retirement hiatus from 2015 to 2017.
Ahuja’s successor doesn’t have quite as lengthy a CV to draw from. Twenty-two years younger than his predecessor and just six years out of business school, Zach Kirkhorn’s rise to the CFO spot has some analysts rattled.
Kirkhorn, 34, joined Tesla nine years ago and serves as the company’s VP of finance. While a business school degree is something you’d want to see in a chief financial officer’s past, Kirkhorn’s past does not contain experience in the CFO chair.
Tesla’s stock fell nearly four percent in early Thursday trading, rebounding to just below Wednesday’s close by afternoon.
As reported by CNBC, the loss of Ahuja is seen by many as a threat to the company’s stability, despite the automaker’s two consecutive quarters of profitability and the ironing out of production hurdles on the Model 3 line. No shortage of braintrust has left the company as of late, especially in the past year.
AB Bernstein wrote, “We see the departure as a significant loss of institutional knowledge, and note that Kirkhorn is a first-time public company CFO, just six years removed from business school.”
Goldman Sachs is of a similar mind, telling investors, “We believe the changeover may cause some uncertainty for investors as Tesla just saw two consecutive quarters of profitability and positive cash flow, and we see potential for a less stable path forward due to a sequential step-down in deliveries, working capital headwinds and convertible debt payment.”
J.P. Morgan Chase expects “investors to react negatively to the replacement of Deepak Ahuja,” while Barclays holds a pessimistic outlook for the stock, citing Kirkhorn’s lack of experience.
Deutsche Bank doesn’t think much of Ahuja’s departure, calling his retirement “unremarkable.” While the automaker faces flattening production in America, an influx of vehicles to Europe and China bodes well for the future, the bank said.
While Kirkhorn will hold the reins once Ahuja departs in the coming months, his predecessor apparently isn’t disappearing to a desert island. In his earnings call, Musk said the retiring CFO will be held on as an advisor.
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