CEO Elon Musk’s stewardship of Tesla Inc (Nasdaq: TSLA) in in serious doubt after the U.S. Securities and Exchange Commission sued Musk for fraud this week, accusing him of making “false and misleading” statements about taking Tesla private with his infamous “funding secured” tweet. Musk’s vision has pushed Tesla to become one of the biggest and most innovative car companies on the planet, but Tesla stock has been falling for several weeks because of his erratic behavior. Is Tesla stock better off with or without Elon Musk?
Better with: Musk is central to Tesla’s success.
TSLA stock will plunge without Elon Musk because they are indelibly intertwined. Many retail shareholders own Tesla chiefly because they believe in Musk, who has become a legendary figure in the tech world, the auto industry and on Wall Street in short order. Institutional investors aren’t immune from this perception either, and indeed most of the bullish theses over the years were at their core based on Musk’s assumed competence and vision. Shares were down 12 percent on the SEC news, and analysts were panicking; one Barclays analyst said Musk’s departure could cost $130 per share as the “Musk premium” disappears.
Better without: Musk is not Wall Street-savvy.
There’s no question Musk is brilliant and innovative, but it takes a unique type of personality to successfully navigate the world of Wall Street. Musk has repeatedly lashed out at Tesla short sellers and famously ignored questions from Wall Street analysts on a Tesla earnings call. The best example of Musk being woefully ignorant of his role as the CEO of a public company is the “funding secured” tweet itself. Even if Musk made the tweet in good faith, he clearly didn’t handle the situation with the care a CEO of a $50 billion company should use.
Better with: Musk inspires passion.
Nobody can get Wall Street analysts and the general public excited about electric cars like Elon Musk. This is a guy who blew car enthusiasts away by unveiling a line of sporty Tesla roadsters, and then he had the hutzpah to put one in a SpaceX rocket and blast it into orbit just so he could send back photos of a mannequin in an astronaut suit cruising through outer space. Musk’s vision and personality has inspired an impassioned following, and that will fade away should Musk be forced out of the C-suite.
Better without: Musk drives away talent.
The executive turnover at Tesla has been…
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