Tesla (TSLA +0.73%) now has its second CFO in a little over four years. The electric vehicle (EV) maker revealed in a regulatory filing on Monday that Zachary Kirkhorn has been replaced as CFO by Vaibhav Taneja. Tesla stated that Taneja will continue to serve in his current role as chief accounting officer in addition to holding the CFO position.
Could Tesla's CFO shakeup cause the once-skyrocketing stock to plummet? History says, "Maybe."
A potentially worrisome change
Investors often worry when there's an unexpected change in the CFO position. There are sometimes good reasons to do so.
A sudden departure by a CFO could indicate that there are more serious problems. For example, Valeant Pharmaceuticals (now known as Bausch Health) announced that Howard Schiller was stepping down as CFO. The company later reported issues in its financial reporting.
Tesla's shareholders do appear to be at least somewhat concerned by the just-announced CFO change. The EV stock fell more than 4% during early trading on Monday.
NASDAQ: TSLA
Key Data Points
However, this decline should be viewed in the context of Tesla's massive gain of close to 120% so far this year. Also, there is no indication at this point that any accounting issues or scandals are involved with the latest shakeup. Tesla even noted in its regulatory filing that Kirkhorn will continue to work with the company through the end of 2023 "to support a seamless transition."
Tesla's CFO history
On Jan. 30, 2019, Tesla CEO Elon Musk announced that then-CFO Deepak Ahuja planned to retire with Kirkhorn taking his place. The news caused Tesla's futures price to sink by 4.5% before the market opened on the next day. However, the market quickly shrugged off the change with Tesla stock rising rather than falling.
Ahuja first left Tesla several years earlier. His retirement was announced on June 9, 2015, and came as a surprise. Tesla stock didn't skip a beat then, though.
He came back to Tesla in 2017 after Jason Wheeler suddenly resigned. The day after Wheeler's departure was announced on Feb. 22, 2017, Tesla stock fell more than 6%. However, the company had also reported its 2016 fourth-quarter and full-year results the previous evening. Those results outweighed Wheeler's exit.
The main takeaway from Tesla's history is that CFO changes have sometimes caused the stock to sink. But any negative impact has been only temporary. And even surprising CFO departures haven't always moved the needle much for Tesla stock. With a CEO who is at times referred to as "mercurial," a game of musical chairs among executives is basically a way of life at Tesla.
More important stories
It's possible that there could be further developments with Tesla's latest CFO change. Barring any major revelations, though, there are other stories that are much more important to the company and its stock.
Musk noted in Tesla's second-quarter earnings conference call that the company is navigating "through a period of economic uncertainty, rising interest rates, volatility in consumer confidence, and regulatory change." That's a pretty good list of factors that will likely affect the stock's price over the near term more than Kirkhorn's exit will.
Over the long term, though, what will matter more are the demand for electric vehicles and the strength of competition from other automakers. The former should serve as a strong tailwind for Tesla, while the latter remains a question mark.
Musk thinks that self-driving capabilities will "drive volume through the ceiling" over the long term. He predicts that future robotaxis will have "quasi-infinite demand." If he's right, investing in Tesla stock should pay off handsomely -- regardless of who serves as the company's CFO.
