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Elon’s Smoke Didn’t Signal a Tesla Fire

What analyzing quarterly earning calls reveals about Tesla’s stability

In the recent infamous Tesla quarterly earnings call (Q2 2018), Elon Musk, CEO, referred to analyst questions as “boring” and “boneheaded,” refusing to answer them. Instead, he turned to YouTube host Galileo Russell and chose to  answer his questions for twenty minutes. While Musk is well known for his rogue attitude and quirky actions, this unprecedented level of disregard for established reporting formalities had an instant negative impact on market perceptions, demonstrated by a five percent drop in the price of Tesla’s shares out of fears that Musk had gone too far. The market wasn’t able to determine if the communication on this call differed in a material way from previous quarters. Was this a true signal, or was it just noise?

What do Distill’s metrics tell us about the May 2018 earnings call?

Distill Analytics measures corporate leadership teams' decisiveness and motivational drivers using quarterly earnings call transcripts. We generate remote psychometric profiles on how people think and what drives them to act. To understand if communication styles displayed in the May 2018 call differed from past calls, Distill Analytics collected Tesla’s quarterly earnings call transcripts from 2010 Q3 to the most recent available quarter, 2018 Q2. The transcripts were analyzed using military grade remote psychometric techniques to generate scores on four distinct metrics: Excellence, Impact, Vulnerability, and Cognition. The result is a comprehensive profile of the Tesla executive team members represented on the company’s quarterly calls.

Did the profile of the May 2018 call differ appreciably from earlier quarters? The answer is no. The communication styles on this call did not deviate from previous levels or patterns in a way that raised any concern. We saw Excellence and Cognition increase from the previous quarter, but remain within a one-year average range. Of note, we registered Impact this quarter, which hadn’t been seen for the previous four quarters. However, the pattern of motivational drivers that we found were consistent with those seen in July of 2014 and February of 2016.

What do these metrics tell us about Tesla more broadly?

EXCELLENCE: We know that, in general, Tesla’s primary driver is Excellence. It is a company focused on raising the bar, being a leader and generating new and unique outcomes, which is what this metric measures. Over the course of our analysis, Tesla has shown high and cyclical Excellence values that correspond with major corporate events. Previous peaks in Excellence have occured for the May 2014 and February 2016 call. These were quarters when federal safety regulators ended the investigation of the Tesla Model S fires and when Tesla released their new product, the Tesla Powerwalls, respectively.

IMPACT: As noted above, Tesla’s communications also intermittently demonstrate Impact—a metric focused on a capability to strongly influence actions or emotions of other people or organizations. Tesla recorded Impact scores in nine out of thirty-one quarters, six of which coincided with periods where there had been negative developments, such as when three Model S vehicles caught fire in a six week period.

COGNITION: Cognition, another metric used in remote psychometric profiling, measures an executive team’s reasoning and thought processes. Normally, Cognition scores fluctuate in different stages of the decision making process, with high scores seen in strategic planning phases and lower scores related to execution phases. Tesla’s highest Cognition period was between November 2014 and May 2015. Tesla generally exhibits a relatively stable Cognition score, only recording minimal shifts from quarter to quarter.

Distill provides an additional perspective for those seeking to understand the whole picture. Our unique methods were developed in academia and validated for use in political and military settings. Contact us to find out what kind of insight you can gain from our metrics.

Lesley Duncan