My brother is visiting from New York, and of course he brought winter weather with him. Yesterday’s high was 78, but it won’t break above 60 again until Monday or Tuesday, after he’s gone. I’m thinking this is it for winter – down on Georgia’s southern coast, once you get to February, it’s pretty much smooth sailing.
We were having a few beers, and I was telling him about my recent revelations about Rivian Automotive (NASDAQ: RIVN) and why I think it will be a big winner this year. I don’t remember his exact words, but it was to the effect of “Well I sure wouldn’t buy a Tesla (NASDAQ: TSLA) at this point – Elon Musk is a d*ck.”
I said something like “huh, interesting” because I really hadn’t thought about it like that, that Elon Musk might have done some serious damage to the Tesla brand with his unhinged behavior around Twitter (NASDAQ: TWTR).
But I think my brother might be onto something…
I’m not going to attempt a play-by-play of Musk’s actions regarding Twitter. I think I can sum the whole thing up pretty quickly…
A modern day Thomas Edison and Henry Ford rolled into one, Musk hit rockstar status in 2018 when he sparked up that joint on Joe Rogan’s podcast. Brilliant, wildly successful, rebellious, sense of humor – my daughter went to Baltimore’s top STEM high school in Baltimore, she said every student there followed him on Twitter.
He was kind of inspirational, really – his personality fit the Tesla brand. And I’d argue that the Tesla brand struck a chord with car buyers in much the same way that Ford’s Mustang did in the 1960s.
Then came Twitter.
Now, I can’t blame somebody who becomes the richest man in the world for feeling kinda good about himself. It’d be shocking if Musk weren’t a little bit arrogant. But holy moly…
A lot of people don’t really remember that Elon Musk had bought a lot of Twitter stock (9% of shares outstanding) when he started talking about buying the company outright…it was pretty clear at the time Musk was trying to push the value of his stock higher. It was a game to him, even when committed to buying the company, even when he tried to back out of buying the company…it never occurred to him that he might not win the game until he was forced by a judge to honor his commitment.
That’s when the wheels came off Tesla, Twitter and the Elon Musk brand.
Tesla shares were trading just over $300 when Musk said he would buy Twitter for $54 a share. By May, when Musk said he was putting the deal on hold, Tesla shares bottomed around $210 and even started to rally. That rally peaked around $240 when Twitter sued to enforce the buyout. And the shares went sideways until late September when it became clear that Elon Musk would indeed buy the company.
It’s been all downhill since that point. The shares now trade around $120.
Now, people have tried to say that it was Musk selling $20 billion worth of Tesla stock caused that catastrophic drop for the share price. But c’mon, Tesla was worth 1,000 billion dollars when Musk started selling. 20 billion out of 1,000 billion is literally a drop in the bucket.
The reason Tesla has fallen so much might well be because of Musk himself. Take a look at his tenure so far at Twitter. It’s been a complete shitshow. Is there anyone he hasn’t fired, pissed off or offended?
Advertisers have abandoned him and Twitter in droves. Because brand identity matters. If it got out that Flo from Progressive tripped over her cat, you can bet that there’d be millions of policy cancellations because Progressive supports animal abuse.
That’s just where we are in America today.
Tesla’s market share has fallen from 68% in 2021 to 65% this year. Now granted, there’s a lot more competition now than there was just a year ago. But anecdotal evidence suggests people are canceling orders and moving on from Tesla cars because of Musk’s personality.
The Genius Founder Problem
Steve Jobs was famously fired from Apple (NASDAQ: AAPL) in 1985 because he rubbed people the wrong way. Uber (NASDAQ: UBER) founder and CEO Travis Kalanick suffered the same fate. Mark Zuckerberg has driven Meta (NASDAQ:META) share price into the ground as spends billions to pursue his metaverse dream, a dream that may be his alone. Sam Bankman-Fried’s inability to consider that he might be wrong brought on one of the most colossal financial meltdowns the world has ever seen…
Now of course each of these examples have their own unique circumstances. Just because these genius corporate founders have done serious damage to their companies doesn’t mean every one of them will. I mean, Jobs made a pretty nice comeback…
Still, it seems to me that Elon Musk has presented the Tesla Board of Directors and its shareholders with a real personality crisis.
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