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Posted October 11, 2024 at 12:49 pm
Earlier this week, we discussed how the options market was preparing for the robotaxi event that Tesla (TSLA) hosted last night. We noted that there was a roughly even split between bulls and skeptics, with a slight bias toward skepticism. Aftert this morning’s downbeat reaction, it occurred to me that TSLA’s history can be divided into two eras at TSLA: BT (Before Twitter) and AX (After X). The performance difference is stark.
To put the dates into perspective, Elon Musk launched the acquisition of Twitter on April 14, 2022, and completed it on October 28th of that year. When the deal was announced, TSLA had just completed an absolutely astonishing run of success. The stock had increased by nearly 20-fold in the two and a half years prior to then. It was literally one of the best investments of all-time, far outpacing the Nasdaq 100 (NDX) and S&P 500 (SPX), making many of its adherents quite rich. The major benchmarks are barely visible in relation to TSLA in the chart below:
Source: Interactive Brokers
Unfortunately, the stock has been dead money since the deal was consummated, and a loser since it was announced. The following normalized graphs show the distinctions:
Source: Bloomberg
Source: Bloomberg
Source: Bloomberg
Source: Bloomberg
Everyone can come up with their own theories for why this distinction arose. Perhaps the stock’s rise was simply unsustainable, but that seems simplistic. My theory is that Twitter/X may have become one company too many for this phenomenal entrepreneur to manage.
It is extraordinarily difficult to manage any company, let alone a company that has changed transportation, and let alone other companies that have transformed spaceflight and telecommunications. But there is a common theme around transportation that binds SpaceX, Starlink, and TSLA together thematically. A social media company is a whole different animal – and a distracting one at that.
Anyone who has spent too much time on social media understands that it can be true time waster. Now imagine trying to manage a multitude of complex companies while spending increased amounts of time on social media without having it affect your performance. It seems impossible, and it very well might be.
And of course, while everyone is free to offer their personal opinions about politics and social issues, there is a real concern that Musk alienated some of his core customers. Many of the early adopters of electric cars, with TSLA being the premier manufacturer of them, did so for environmental and social reasons. Yet some of those core customers became dismayed when Musk chose to offer political opinions that differed from theirs, just as other carmakers were rolling out worthy electric competitors. I know of several who sold or traded in their Teslas for that reason.
We can debate the themes — and I’m expecting a lively debate in the comments (please keep it civil!) – but the evidence seems clear. There are clearly two eras at TSLA, at least regarding its stock performance: BT and AX.
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It’s not that his political views are different, they’re are many CEO that have similar views. The problem is Mr. Musk in you face know all attitude.
Posting every 2 seconds doesn’t help.
X and trying to reelect Donald Trump has become his obsession and it will absolutely hurt Tesla in the long run. X’s value is down 80% and Tesla will soon follow – he will learn that alienating your biggest consumer base is not a wise strategy.
Its not just the manager being under increased pressure. Tesla clients too. I wont be buying anything from Mr Musk. The more I learn about him, the less I like his character and products. For the record, I wont be going to Mars,I dont need a robot, a chip for my head, or X to bore tunnels through my head.
Yup
I prefer my cars with a little less Himmler, thank you very much
I guess you shouldn’t buy GOOGL, META, MSFT as well then… I prefer my Country with a little less Marxist
I recently got an EV, my first. I test drove a number of cars but completely avoided Tesla because of Musk’s self serving arrogant attitude and political support for another arrogant rich guy who doesn’t care about anyone but himself. No way l would give one penny to Musk!
and as of last night, you can add a giant belly flop of an announcement on Robocars to his list of declining glory. Guy should have stuck to his knitting – cars and space. Everything else is a distraction.
Mr Musk has left me way behind.
It seems to me that as much as we may dislike Musk’s over reach the real decline is just due to lack of new product differentiation. Tesla achieved it’s goal of pushing the car market toward EVs and now they are on among many instead of the only legit game in town. But I would be careful painting this company as one that is going down hill. Remember that this is an election year and consumer memories are short. People are looking at the robotaxis instead of the optimus robots serving the drinks and talking to the attendees.
If Tesla is going to have another massive rise it will be on the back of robotics and humanoid robots not taxis. So the real question is can he pull of another world changing product or is he just promising things he can’t make come true.
‘Never underestimate a man who overestimates himself’
I bought an EV. I went and tested every car out there. When all was said and done, the BMW, VW and Hyundai offerings were head and shoulder above Tesla. My concerns were later validated when JD Power and Associates showed that Tesla is in the lowest quartile in maintenance. The issue is not just that Musk is obsessed with Trump and betraying his base–it is more serious: He took his off the ball, and it shows in the quality of the product.
I just have to shake my head at most of the comments. Mr. Musk is just the smartest man on this planet…bar none. Face it folks, he is smarter than you…way smarter than you. He OWNs Space X. Do you really think he cares if you buy his cars or not. LOL.
It reminds me of when Michael Jordan was asked why he didn’t use his celebrity as a platform to publicly throw his support to the Democratic / Liberal presidential candidate at that time. His reply was something to the effect of “Hey, Republicans buy sneakers too”
Mr Musk could take a lesson from Mr Jordan.
I got out of Tesla soon after the Twitter deal.
Those who trade TSLA (aka “the Teslans”) are an interesting subset of most normal traders. Based on the pre-demo X comments (if they were indeed real), it would seem that some are true believers.
.., but the real believers are the day traders who believe (and somehow, it continues to be true) that this stock will move significantly, whipsawing back and forth with relatively large price changes for a stock in it’s price range.
In that way, regardless of anything else, it does serve a useful purpose.
If you will, it is a “vehicle” for the number that is price changing (aka creating profits/losses) significantly over a relatively short period of time.
How will this all play out…?
4T => There Things Take Time
Love the play on BC and AD Steve.
Thanks for great reporting on a number of topics on this social media site. The gods are indeed playing with us.
We hope you continue to enjoy Traders’ Insight!
It’s important to note that Musk doesn’t deserve credit for the labor of the 6+ corporations he’s ostensibly a figurehead of. No one can manage that. As a symbol figurehead whose myth-making attracts capital to corporate entities, however, he is phenomenal; so were the confidence men who hawked non-existent railroad stocks prior to the (first) Gilded Age. During the pandemic, Musk’s net worth multiplied by over 1000%. This is not because of Tesla’s earnings, it was because, quite simply, of surplus speculative capital provided to owners of capital (and, yes, some small retail capital speculators) while their labor forces were furloughed.
Certainly, however, those corporations are doing some pretty fantastic stuff, but coordinating engineers to a purpose could’ve been done by any entity — including the government, as NASA in the past has shown, and as China itself currently demonstrates. EV cars are a reality there, and their competitive success here in America is blocked by policy.
Accumulating massive capital on the backs of labor does not make one a brilliant entrepreneur, despite America’s misguided worship of Freudian daddy figures. The shortened form the term “confidence man” relies heavily on the confidence part. All bubbles eventually deflate.
I think your conclusion is backward; Tesla’s bearish trend in 2022 should be attributed to the saturation of the electric vehicle market.
There are still many issues with electric vehicles, including insufficient mileage from batteries and safety concerns, which means the customer base for battery cars has always been a fixed group of people.
Additionally, the rise of Chinese electric vehicles has compressed Tesla’s sales, ultimately forcing the company to engage in price competition in 2023. Musk may have sensed these concerns before 2022, and his anxiety led him to make extreme statements on Twitter during that time, resulting in his ban from posting.
With his wealth, his solution was to buy Twitter, freeing himself from restrictions; this is what actually happened.
Musk doesn’t deserve credit for the labor of the 6+ corporations he’s ostensibly a figurehead of. No one can meaningful contribute to 6 companies, especially as a “leader.” But, as a symbolic figurehead whose myth-making attracts capital to these corporate entities, he’s phenomenal. So were the “confidence men” who hawked non-existent railroad stocks prior to the (first) Gilded Age. During the pandemic, Musk’s net worth multiplied by over 1000%. This is not because of Tesla’s earnings, it was because, quite simply, the government directly supported firms with surplus capital while their labor costs were abrogated. That capital was translated to speculation and asset price inflation, with the biggest confidence men winning the pot.
Certainly, however, those corporations are building some pretty novel stuff, but coordinating engineers to a purpose could’ve been done by any entity — including the U.S. government, as NASA in the past has shown, and as China itself currently demonstrates. Alternately the engineers could own the company themselves. BEV cars are already a reality China, and their competitive success here in America is blocked by policy. Plus, knowledge and research is a cumulative, social form of wealth that CEOs seem quite happy to appropriate as if they themselves are the source of that value.
Accumulating massive capital on the backs of the labor that actually creates that value does not make one a brilliant entrepreneur, despite America’s sycophantic worship of Freudian daddy figures. The term “con man” is shorted from “confidence man.” All bubbles eventually deflate.
Musk should have bought Nikola vs Twitter. Having a truck company vs a social media company would’ve made a lot more sense.