The first month of Musk's ownership has seen job cuts and employee departures. The ill-advised purchase of TWo is having an impact on Musk's most prominent company and the source of most of his wealth. With shares in the electric car maker plunging, observers are questioning Musk's near-mythic status as the world's foremost techentrepreneur.
There are cracks in that facade. Everybody is wondering if he knows what he's doing. It's time to give it a few more months. You'll understand. A general partner at RedBlue Capital, which invests in mobility startup, says that he will turn the social networking site around. People are starting to doubt that. Cracks can get bigger, so they are a risk.
His questionable judgment and recent actions have turned him into a punchline for late-night TV hosts who have put him on a list of divisive figures. At the same time, Musk has been making fun of politicians, mostly Democrats, for his own amusement. That wasn't the wisest move.
The company is under an FTC consent decree. The NHTSA is looking into another case. You spend your time picking fights online. Fix your businesses. Either Congress will or will not.
In his book, Musk:Tesla,SpaceX, and the Quest for a Fantastic Future, the writer said that Musk has turned himself into a deity in Silicon Valley because of his willingness to tackle impossible things. It celebrated Musk's achievement of keeping the company alive to spark an electric car revolution that has since spread across the global auto industry and his equally implausible success in turning the company into the most important private rocket company.
“We definitely see cracks in that facade. Everybody's asking: Does he know what he's doing?”
Musk's companies were mission-driven, committed to ending the world's oil addiction and even colonizing Mars, and they were convinced that he was no ordinaryentrepreneur. The company's valuation and price-to-earnings ratiopeaked at more than 1,300 times earnings, before it became profitable. It's fallen back to Earth at about 51 times earnings, compared with six times earnings for Ford and GM. The value of the world's most valuable car company is $530 billion, down from more than $1 trillion in October.
Musk didn't anticipate his failures, such as the troubled purchase of Musk's SolarCity ahead of the solar power company's potential bankruptcy, and his inability to turn the science fiction-inspired Hyperloop concept into anything more than single-lane car tunnels. His reckless rants against Covid-19 lock downs at the peak of the Pandemic in 2020 didn't help his reputation. His decision to put the first European plant of the electric car maker in a region of Germany at risk of a sustained water shortage that is likely to restrict the factory's production capacity seems foolish. His recent advocacy of humanoid robots that will work atTesla plants seems to be unrealistic.
Adding his issues to the mix doesn't inspire confidence.
There is a chance that this will affect the brand of Musk and the company. It is a fork in the road for Musk and his company. If he cuts 70% of the workforce, keeps advertisers, and turns this trainwreck around, his genius will be further solidified. The way Musk has handled the situation leaves a stain on his brand and that of his company as a whole. There is an overhang on the stock.
Musk, who is the world's richest person, has seen his company's market value plummet since he completed his purchase of the social networking site. This year, it is down about 50%. GM and Ford have gained since October, but their shares are down by a third this year.
There are other sources of the recent weakness in the shares of the company. Weakening macro data in China is leading to concerns onTesla, which has been lowering prices there to boost local demand
The investors are paying attention to the weaknesses. According to conversations with finance officials, hedge funds may be shifting to a negative bias onTesla stock. He said that they are worried about a loss of focus for Musk with his acquisition.
Musk wants to sell 20 million vehicles by the year 2030. It looks like a stretch for a company that has yet to sell a million cars, and is double the volume of global giants like Toyota and Volkswagen. Though its inability to offer an affordable electric vehicle is a limiting factor, its sales will continue to grow. The average price of a car in the US is $67,800.
“This is an individual who has demonstrated a total lack of grace, has no guardrails around him and is going to see his wealth probably cut in half.”
In the third quarter of the year, traffic to Kelley Blue Book, the brand's first decline, led to a dip in U.S. consumer interest in buyingTeslas. According to the auto retailing site, there was a decline in the number of shoppers. The largest quarter-over-quarter loss for any luxury brand was recorded byTesla, which fell to sixth in the rankings of most-shopped luxury brands.
There is a chance that the decline in consumer interest is an outlier. It's possible that it's indicative of the reality that many companies are bringing compelling new electric vehicles to the market that compete directly withTesla and in some cases offer features or pricing that are more
Since Musk has made himself synonymous with the brand, it is reasonable to think that his willingness to express partisan political views could pose a risk to the brand.
Scott Galloway, professor of marketing at New York University's Stern School of Business, said in a recent CNN interview that he thinks we are seeing the unwind of a person. We don't know his genius because every stupid move he makes is seen as chess.
He is going to see his wealth cut in half because of his lack of grace. He can't deny his accomplishments, but now he's running three different companies. There is a notion that there is a super being.
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