Former TSLA shareholder here. (Bought in early '10s and sold around 2018, when Elon started going off his rocker accusing the diver rescuing kids of being a pedophile. Didn't make as much as I could had I held, but I'm also not going to complain about a 22x return.) Some thoughts:
1. On the value of Elon's "ideas", he is not a creative genius that will make or break Tesla. He's not an AI or robotics expert (contra movie cameos, he is no Tony Stark), and is hardly the only person thinking about robot taxis. Price those "ideas" accordingly.
2. As the Cybertruck debacle demonstrates, Tesla needs to be less focused on introducing crazy new concepts (that no one was asking for), and more focused on being a reliable automobile manufacturer. Tesla's reputation for quality has sunk DRAMATICALLY since the days of those early glowing Consumer Reports reviews. At this point Tesla needs more of a Tim Cook figure than a Steve Jobs running things.
3. The Supercharger firing fiasco illustrates to what extent Elon is a chaos agent within his companies for no discernible benefit. The further he can be pushed away from day-to-day decision-making in all of his companies will only benefit those enterprises, as they already have solid competent leaders in place, who need to focus on running their businesses, and not managing ketamine tantrums.
4. Elon made a big mistake inserting himself in the center of a bunch of culture wars. At this point, he may be the only thing propping up TSLA's valuation on Wall Street (I expect it would collapse should he leave), but he's turned off significant markets for TSLA's products with his X and culture war shenanigans. The man is free to hold a public opinion, but he's terrible at judging what effects his words will have on the things other people are working on that he's associated with.
5. Elon argues that he hit significant share milestones and is correct on that front. However, it's worth asking whether those milestones were hit because of anything he did, or whether TSLA was one of the biggest beneficiaries of a lot of COVID stimulation funds going to retail investors who bid the price of the stock up more on the basis of the free money they just received from Uncle Sam instead of any drastic changes or improvements in the company's fundamentals.
6. The talk about "forcing" Elon to work for Tesla is pretty laughable. The relationship's flowed in the other direction, such as when he brought in Tesla engineers to right the Twitter ship (after Elon fired the folks that knew how to run that company), and he's recently been caught having Nvidia re-prioritize his xAI company for GPUs that were originally intended for Tesla. The question that should be asked is to what extent should Tesla shareholders be forced to subsidize Musk's other enterprises, with no consideration or reward provided when Musk decides unilaterally to shift those resources onto another one of his pet projects?
If I did still hold TSLA shares, I would be a firm NO vote on the compensation package. Tesla's value has been untethered to any underlying fundamentals since before I exited my position, and awarding Musk the 56 billion pay package - especially after the loss in equity since those heady days of plentiful stimulus checks and zero percent interest rates - is just rewarding bad behavior and a signal that TSLA is more interested in remaining a meme stock than an actual company with actual performance targets, fundamentals, and justifiable value.
All correct. Your key statement is that should Elon leave, the stock will collapse. Therefore him staying is a fiduciary duty to shareholders. Or him leaving is a breach of same. Staying uncompensated is making him a slave. So regardless of personal opinion, Tesla’s value is based on his staying and investing mental energy. Whether that’s real or FOMO it’s part of the market pricing.
Tesla's value as a stock is dependent on Elon, since it's effectively a meme stock at this point.
Tesla's value as a sustainable company doing productive things is being eroded the longer it keeps Elon around and the company remains a meme stock.
Tesla has an opportunity now to do the right thing and start acting as a Real Company right now. It's true that the stock will take a hit as it deflates from some indicator on Elon's genius and starts to get valued the same way other companies DOING THE EXACT SAME THING are. That said, even with that deflated value, the company will persist MUCH longer and have a better chance of remaining an ongoing concern once they pull the Elon Band-Aid off.
By keeping Elon aboard, investors are signalling that they prefer for the company to be more akin to an NFT or Dogecoin, where the value of the company isn't based on its accomplishments or performance, but mainly on the "vibes" that retail investors assign to it. (More akin to DJT than Ford.) I'd argue that there's not just a fiduciary responsibility to keep the stock price elevated NOW, but also a fiduciary responsibility to get the company into a more stable and predictable state so that when the bubble pops, shareholders aren't wiped out immediately (a la Tom Brady and FTX).
“Tesla's value as a sustainable company doing productive things is being eroded the longer it keeps Elon around and the company remains a meme stock.” I think that’s arguable. It’s not just a meme stock though that is a large part of the overpriced value. It’s one of those paradoxes since Tesla would have failed if not for Elon and his reality distortion zone.
However I agree Tesla should be run by a Tim Cook not a Steve Jobs. Let the stock reprice and many investors will lose value. I personally got out in 2020 and don’t plan to get back in TSLA.
"I think that’s arguable. It’s not just a meme stock though that is a large part of the overpriced value. It’s one of those paradoxes since Tesla would have failed if not for Elon and his reality distortion zone."
Given that its market cap exceeds its next five competitors combined, I'll stand behind my "meme stock" comment. It's not a leader in ANY of the growth markets that might be used to justify that excessive stock price (AI, robotics, taxis, etc.), and it's not clear that TSLA is sitting on any intellectual property that would also position it as a gatekeeper to the electric market. It's also pretty clear that TSLA has squandered its first mover advantage in EVs to the point that the rest of the auto industry has caught up.
The advantages that TSLA does enjoy is its direct-to-consumer model (which gets rid of the dealer middle-men) and its SuperCharger network, the latter of which, Musk fired the folks behind it when one of his managers stood up to him when he wanted to impose a moronic stack ranking scheme to show that he was serious about cutting costs after a couple bad quarters.
TSLA's a lot like GME in that Musk is serving in the role of Ryan Cohen, with expectations that he'll take the company further into the stratosphere (when the opposite has been true lately). People aren't buying the stock because they believe that it's priced rationally - they're purchasing bets that they won't be the last bag holder remaining when the music stops.
Among Tesla’s assets as “gatekeeper” is the largest NACS charging network in America and by far the largest driver training set for self-driving AI. Those are valuable assets and provide a basis for the high valuation, though “meme stock” plays into all of it. Musk’s vision and drive (again, he’s an a-hole to work for) have positioned the company to do far more than cars. If those things are correctly pursued. Lately Musk treats his businesses as a lord treats the milkmaid. So I’d advise caution. But I’m not sure Tesla has squandered its position. However it does need grown ups to run the place.
Against the grain, I think Cybertruck is a genius-level move. Other companies pay their own way for concept cars. Elon got super fans to pay for his. And they will be his beta testers to build self driving training data on 4w steering vehicles. (No FSD or even autopilot on Cybertruck.) Personally I think they’re ugly as can be. Even wrapped in black they’re horrendous. Musk can sell white face paint to albinos and call it sunblock.
Firing the entire charging team is the problem, and as more automakers implement NACS and other charging networks add NACS cables to their units (which is a simple swap) this move by Elon harms Tesla.
The CyberTruck was a waste of time and resources that would have been better served putting out the Model 2 - and that would have been a better move for his fiduciary duty to the shareholders.
"Lately Musk treats his businesses as a lord treats the milkmaid."
That's one way of putting it. From today's WSJ:
"She is one of several female employees at SpaceX who have told friends, family, or the company itself, that Musk showed them an unusual amount of attention or pursued them."
"One woman, a SpaceX flight attendant, alleged that in 2016 Musk exposed himself to her and offered to buy her a horse in exchange for sex acts."
"Another woman who left the company in 2013 alleged in exit negotiations with SpaceX human resources and legal executives that Musk had asked her to have his babies."
"A fourth woman had a month-long sexual relationship with Musk in 2014 while she directly reported to him. The relationship ended badly, leading to recriminations over text and email as she left the company and signed an agreement prohibiting her from discussing her work for Musk."
"Former SpaceX executives, as well as fired SpaceX employees who complained to the National Labor Relations Board in 2022, say a high-level group around Musk fails to apply his company’s own rules to the CEO, contributing to a culture of sexism and harassment.
They say there’s an understanding that Musk, a charismatic leader with many fans who call him a genius, can act with impunity. 'Elon is SpaceX, and SpaceX is Elon,' one former engineer recalled an executive saying during a June 2022 meeting after the firings of some of the SpaceX employees, who had criticized Musk and demanded greater accountability at the company."
To put this another way, I'd consider getting back into a TSLA position if Elon were gone and a competent executive were running the company on the strength of its existing infrastructure alone. However, as long as Elon is there throwing crap against the wall and seeing what sticks (while also damaging the existing infrastructure that has value), I'm staying away from the stock. And I'm sure that I'm not alone in this sentiment.
Fascinating conversation back and forth guys; really. TSLA and all of its nuances is well outside my wheelhouse. Both takes have merit, both leave me with the question i had before today's column: "Is Elon an idiot savant or is he just an narcissistic idiot?
I know that sounds awful, but clearly his genius puts him in the savant category. Unfortunately his stock manipulations border on sinister/questionable and the question regarding insider trading is an obvious one. The way he treats employees is a whole other discussion.
Let me think about it this way: Bill Gates? or Elon Musk? Is it even freaking close?
For all my slagging of Musk above, I do think that he deserves a TON of credit for both Tesla as well as SpaceX. He had enough money from his PayPal adventures to funnel into passions of his, AND to recruit the right teams to see his visions through to completion. He was in the right place to give the right people the right permission to do the right things, and we're reaping the benefits of that both here on Earth and beyond.
The major issue that I have with the fellow is that sometime around 2017, he started believing his own press and it's been downhill since then. Gates was smart enough to stay a step removed and work behind the scenes, Musk seems obsessed with achieving a level of celebrity that would rival the Kardashians at their height. That's been to his (and his companies') detriment, even if he cannot see that outside his bubble. If he stepped away from the public sphere for a while to go work on some other thing, he'd give the folks actually doing the work enough space to excel at it and take it further than they would as long as he insists on being in the room all the time.
One question for everyone. If there *was* an existential/extinction level event that not everyone believed, but needed the best tech hard core applied to even hope to solve, who would you want running the effort? Gates or Musk?
There has certainly been enough in the press lately that makes me question Gates' decision-making skills in his personal life, but he seems sober-minded when it comes to his foundation. Or it's all PR and we don't really know the truth about either one of them--who really knows?
He's already doing that kind of work without the pomp and circumstance that Musk demands when it comes to addressing serious issues in the developing world, including malaria.
That’s a reasonable take. I think there’s a greater chance of the reincorporation passing than the compensation deal. Anywhere 60-75% on compensation deal. 80% on moving to Texas bc institutional supports it.
I haven't been following the reincorporation measure as closely, so it's interesting that there's institutional support for redomiciling to Texas. I don't have a good sense whether Texas is significantly different than Delaware as it pertains to shareholder rights and protections.
Maybe you're just being pedantic, but ... to suggest the richest man in the world is a literal slave is not a good look. Musk has made plenty of wealth from Tesla... he's not working for free.
Since 2018, Musk has worked for Tesla for free. The only source of cash he has had is selling existing shares, that he paid for, but yes, he’s made a lot of wealth from those shares. You’re suggesting he is bound to keep working for the created value despite a 2018 deal: that’s what Judge McCormick also favors. I suggest he has no such duty.
He can quit at any time (subject to whatever legal contract he’s under)… so he’s not bound in any real way that makes the hyperbolic term “slave” true.
Former TSLA shareholder here. (Bought in early '10s and sold around 2018, when Elon started going off his rocker accusing the diver rescuing kids of being a pedophile. Didn't make as much as I could had I held, but I'm also not going to complain about a 22x return.) Some thoughts:
1. On the value of Elon's "ideas", he is not a creative genius that will make or break Tesla. He's not an AI or robotics expert (contra movie cameos, he is no Tony Stark), and is hardly the only person thinking about robot taxis. Price those "ideas" accordingly.
2. As the Cybertruck debacle demonstrates, Tesla needs to be less focused on introducing crazy new concepts (that no one was asking for), and more focused on being a reliable automobile manufacturer. Tesla's reputation for quality has sunk DRAMATICALLY since the days of those early glowing Consumer Reports reviews. At this point Tesla needs more of a Tim Cook figure than a Steve Jobs running things.
3. The Supercharger firing fiasco illustrates to what extent Elon is a chaos agent within his companies for no discernible benefit. The further he can be pushed away from day-to-day decision-making in all of his companies will only benefit those enterprises, as they already have solid competent leaders in place, who need to focus on running their businesses, and not managing ketamine tantrums.
4. Elon made a big mistake inserting himself in the center of a bunch of culture wars. At this point, he may be the only thing propping up TSLA's valuation on Wall Street (I expect it would collapse should he leave), but he's turned off significant markets for TSLA's products with his X and culture war shenanigans. The man is free to hold a public opinion, but he's terrible at judging what effects his words will have on the things other people are working on that he's associated with.
5. Elon argues that he hit significant share milestones and is correct on that front. However, it's worth asking whether those milestones were hit because of anything he did, or whether TSLA was one of the biggest beneficiaries of a lot of COVID stimulation funds going to retail investors who bid the price of the stock up more on the basis of the free money they just received from Uncle Sam instead of any drastic changes or improvements in the company's fundamentals.
6. The talk about "forcing" Elon to work for Tesla is pretty laughable. The relationship's flowed in the other direction, such as when he brought in Tesla engineers to right the Twitter ship (after Elon fired the folks that knew how to run that company), and he's recently been caught having Nvidia re-prioritize his xAI company for GPUs that were originally intended for Tesla. The question that should be asked is to what extent should Tesla shareholders be forced to subsidize Musk's other enterprises, with no consideration or reward provided when Musk decides unilaterally to shift those resources onto another one of his pet projects?
If I did still hold TSLA shares, I would be a firm NO vote on the compensation package. Tesla's value has been untethered to any underlying fundamentals since before I exited my position, and awarding Musk the 56 billion pay package - especially after the loss in equity since those heady days of plentiful stimulus checks and zero percent interest rates - is just rewarding bad behavior and a signal that TSLA is more interested in remaining a meme stock than an actual company with actual performance targets, fundamentals, and justifiable value.
All correct. Your key statement is that should Elon leave, the stock will collapse. Therefore him staying is a fiduciary duty to shareholders. Or him leaving is a breach of same. Staying uncompensated is making him a slave. So regardless of personal opinion, Tesla’s value is based on his staying and investing mental energy. Whether that’s real or FOMO it’s part of the market pricing.
Tesla's value as a stock is dependent on Elon, since it's effectively a meme stock at this point.
Tesla's value as a sustainable company doing productive things is being eroded the longer it keeps Elon around and the company remains a meme stock.
Tesla has an opportunity now to do the right thing and start acting as a Real Company right now. It's true that the stock will take a hit as it deflates from some indicator on Elon's genius and starts to get valued the same way other companies DOING THE EXACT SAME THING are. That said, even with that deflated value, the company will persist MUCH longer and have a better chance of remaining an ongoing concern once they pull the Elon Band-Aid off.
By keeping Elon aboard, investors are signalling that they prefer for the company to be more akin to an NFT or Dogecoin, where the value of the company isn't based on its accomplishments or performance, but mainly on the "vibes" that retail investors assign to it. (More akin to DJT than Ford.) I'd argue that there's not just a fiduciary responsibility to keep the stock price elevated NOW, but also a fiduciary responsibility to get the company into a more stable and predictable state so that when the bubble pops, shareholders aren't wiped out immediately (a la Tom Brady and FTX).
“Tesla's value as a sustainable company doing productive things is being eroded the longer it keeps Elon around and the company remains a meme stock.” I think that’s arguable. It’s not just a meme stock though that is a large part of the overpriced value. It’s one of those paradoxes since Tesla would have failed if not for Elon and his reality distortion zone.
However I agree Tesla should be run by a Tim Cook not a Steve Jobs. Let the stock reprice and many investors will lose value. I personally got out in 2020 and don’t plan to get back in TSLA.
Elon will find another FOMO to meme-ify.
"I think that’s arguable. It’s not just a meme stock though that is a large part of the overpriced value. It’s one of those paradoxes since Tesla would have failed if not for Elon and his reality distortion zone."
Given that its market cap exceeds its next five competitors combined, I'll stand behind my "meme stock" comment. It's not a leader in ANY of the growth markets that might be used to justify that excessive stock price (AI, robotics, taxis, etc.), and it's not clear that TSLA is sitting on any intellectual property that would also position it as a gatekeeper to the electric market. It's also pretty clear that TSLA has squandered its first mover advantage in EVs to the point that the rest of the auto industry has caught up.
The advantages that TSLA does enjoy is its direct-to-consumer model (which gets rid of the dealer middle-men) and its SuperCharger network, the latter of which, Musk fired the folks behind it when one of his managers stood up to him when he wanted to impose a moronic stack ranking scheme to show that he was serious about cutting costs after a couple bad quarters.
TSLA's a lot like GME in that Musk is serving in the role of Ryan Cohen, with expectations that he'll take the company further into the stratosphere (when the opposite has been true lately). People aren't buying the stock because they believe that it's priced rationally - they're purchasing bets that they won't be the last bag holder remaining when the music stops.
Among Tesla’s assets as “gatekeeper” is the largest NACS charging network in America and by far the largest driver training set for self-driving AI. Those are valuable assets and provide a basis for the high valuation, though “meme stock” plays into all of it. Musk’s vision and drive (again, he’s an a-hole to work for) have positioned the company to do far more than cars. If those things are correctly pursued. Lately Musk treats his businesses as a lord treats the milkmaid. So I’d advise caution. But I’m not sure Tesla has squandered its position. However it does need grown ups to run the place.
Against the grain, I think Cybertruck is a genius-level move. Other companies pay their own way for concept cars. Elon got super fans to pay for his. And they will be his beta testers to build self driving training data on 4w steering vehicles. (No FSD or even autopilot on Cybertruck.) Personally I think they’re ugly as can be. Even wrapped in black they’re horrendous. Musk can sell white face paint to albinos and call it sunblock.
Firing the entire charging team is the problem, and as more automakers implement NACS and other charging networks add NACS cables to their units (which is a simple swap) this move by Elon harms Tesla.
The CyberTruck was a waste of time and resources that would have been better served putting out the Model 2 - and that would have been a better move for his fiduciary duty to the shareholders.
"Lately Musk treats his businesses as a lord treats the milkmaid."
That's one way of putting it. From today's WSJ:
"She is one of several female employees at SpaceX who have told friends, family, or the company itself, that Musk showed them an unusual amount of attention or pursued them."
"One woman, a SpaceX flight attendant, alleged that in 2016 Musk exposed himself to her and offered to buy her a horse in exchange for sex acts."
"Another woman who left the company in 2013 alleged in exit negotiations with SpaceX human resources and legal executives that Musk had asked her to have his babies."
"A fourth woman had a month-long sexual relationship with Musk in 2014 while she directly reported to him. The relationship ended badly, leading to recriminations over text and email as she left the company and signed an agreement prohibiting her from discussing her work for Musk."
"Former SpaceX executives, as well as fired SpaceX employees who complained to the National Labor Relations Board in 2022, say a high-level group around Musk fails to apply his company’s own rules to the CEO, contributing to a culture of sexism and harassment.
They say there’s an understanding that Musk, a charismatic leader with many fans who call him a genius, can act with impunity. 'Elon is SpaceX, and SpaceX is Elon,' one former engineer recalled an executive saying during a June 2022 meeting after the firings of some of the SpaceX employees, who had criticized Musk and demanded greater accountability at the company."
https://archive.is/QSEQB
To put this another way, I'd consider getting back into a TSLA position if Elon were gone and a competent executive were running the company on the strength of its existing infrastructure alone. However, as long as Elon is there throwing crap against the wall and seeing what sticks (while also damaging the existing infrastructure that has value), I'm staying away from the stock. And I'm sure that I'm not alone in this sentiment.
Just a reminder: if you own any S&P 500 index funds/ETFs then you own TSLA too.
Fascinating conversation back and forth guys; really. TSLA and all of its nuances is well outside my wheelhouse. Both takes have merit, both leave me with the question i had before today's column: "Is Elon an idiot savant or is he just an narcissistic idiot?
I know that sounds awful, but clearly his genius puts him in the savant category. Unfortunately his stock manipulations border on sinister/questionable and the question regarding insider trading is an obvious one. The way he treats employees is a whole other discussion.
Let me think about it this way: Bill Gates? or Elon Musk? Is it even freaking close?
For all my slagging of Musk above, I do think that he deserves a TON of credit for both Tesla as well as SpaceX. He had enough money from his PayPal adventures to funnel into passions of his, AND to recruit the right teams to see his visions through to completion. He was in the right place to give the right people the right permission to do the right things, and we're reaping the benefits of that both here on Earth and beyond.
The major issue that I have with the fellow is that sometime around 2017, he started believing his own press and it's been downhill since then. Gates was smart enough to stay a step removed and work behind the scenes, Musk seems obsessed with achieving a level of celebrity that would rival the Kardashians at their height. That's been to his (and his companies') detriment, even if he cannot see that outside his bubble. If he stepped away from the public sphere for a while to go work on some other thing, he'd give the folks actually doing the work enough space to excel at it and take it further than they would as long as he insists on being in the room all the time.
One question for everyone. If there *was* an existential/extinction level event that not everyone believed, but needed the best tech hard core applied to even hope to solve, who would you want running the effort? Gates or Musk?
Gates
There has certainly been enough in the press lately that makes me question Gates' decision-making skills in his personal life, but he seems sober-minded when it comes to his foundation. Or it's all PR and we don't really know the truth about either one of them--who really knows?
Gates 100%.
He's already doing that kind of work without the pomp and circumstance that Musk demands when it comes to addressing serious issues in the developing world, including malaria.
https://www.ted.com/talks/bill_gates_mosquitos_malaria_and_education
I don't think we covered this, but what's everyone's bet on how the vote turns out today?
Personally, I think Musk has a 75% chance of succeeding with the shareholders.
That’s a reasonable take. I think there’s a greater chance of the reincorporation passing than the compensation deal. Anywhere 60-75% on compensation deal. 80% on moving to Texas bc institutional supports it.
Looks like we can watch this live!
https://www.theverge.com/2024/6/13/24177635/tesla-shareholder-how-to-watch-livestream-elon-musk-pay-package
I haven't been following the reincorporation measure as closely, so it's interesting that there's institutional support for redomiciling to Texas. I don't have a good sense whether Texas is significantly different than Delaware as it pertains to shareholder rights and protections.
Maybe you're just being pedantic, but ... to suggest the richest man in the world is a literal slave is not a good look. Musk has made plenty of wealth from Tesla... he's not working for free.
Since 2018, Musk has worked for Tesla for free. The only source of cash he has had is selling existing shares, that he paid for, but yes, he’s made a lot of wealth from those shares. You’re suggesting he is bound to keep working for the created value despite a 2018 deal: that’s what Judge McCormick also favors. I suggest he has no such duty.
He can quit at any time (subject to whatever legal contract he’s under)… so he’s not bound in any real way that makes the hyperbolic term “slave” true.