Well... there's all kinds of information asymmetry in investing. Musk generally has a clearer picture of the company's future than investors, such that signalling theory postulates that when he decides to issue equity, this may be interpreted as him viewing the equity is overvalued. i.e. selling an overvalued stock makes sense. Particularly, selling an overvalued stock prior to bad news coming out that would negatively affect the valuation, such as a growing rate of cancelled orders. Just making something up here.
As such, knowing nothing about the firm, and only the timing of the equity issue, most investors are usually inclined to interpret an equity issue as the stock being overvalued somewhat, and adjust accordingly.
So the market not liking this may just be a function of general principles of finance, and have little to do with the specifics of the company itself.