If the rate holds, Tesla could lose 150 senior leaders in less than four years, as questions swirl about its hiring and cultural practices.
Turnover in Tesla’s top ranks is higher than almost any other company, new research shows, and it could be reason enough for investors to worry.
Analysts at Bernstein compared the recent departures from Elon Musk’s ranks with that of other comparable companies, and found that Tesla’s turnover rate was 27% compared to an average of 15%.
“We performed a detailed benchmarking analysis of executive turnover (~top 50 to 150 executives) at Tesla and at comparable companies that are young, fast growing, and largely Silicon Valley based, including Snap, Uber, Lyft, Airbnb, Netflix, Facebook and Amazon,” the team, lead by Toni Sacconaghi, wrote in a note to clients.
“Our analysis indicates that Tesla’s annualized executive turnover level has been 27%, notably higher than the cohort average of 15% – that said, it is not outlandish – Snap (24%) and Lyft (23%) have experienced turnover that is nearly as high.”
By Bernstein’s count — which adds to the list Business Insider has been tracking for the better part of two years— 31 executives have departed Tesla in the past nine months. Of Elon Musk’s 18 direct reports, six have left over the observation period, a rate double the next highest company, Lyft.
“We can now factually, say that Tesla’s executive turnover appears to be high relative to peers, and extremely high in terms of its senior-most executives in the direct line of fire of Musk,” Bernstein said.
The firm rates Tesla stock as “equal weight,” as opposed to a buy or sell-equivalent, with a price target of $325 — 51% higher than where shares were trading on Thursday.
Upheaval in Musk’s direct reports is especially notable given his many other side bets, Bernstein says, including SpaceX, the Boring Company, and the newest addition, Neuralink. The firm maintains that Tesla would be “well served” by adding a “credible, pragmatic” chief operations officer to the C-suite.
Then there’s the culture such a tumultuous executive cadre telegraphs to the outside world about internal practices.
“While one could argue that Tesla’s high turnover reflects its unique and demanding culture, we worry that such turnover not only causes instability (at the current rate, the entire executive team of 150+ people would be gone in less than 4 years!) but could also potentially reflect more significant concerns among senior leaders about the company’s direction or workplace practices.”
This article was originally published on Business Insider. Copyright 2019.
