For Elon Musk, Tesla Investors Vote With Their Tweets
(Bloomberg Opinion) -- Who needs a metaverse when you have Elon Musk’s Twitter feed? In the latest installment, the bad boy billionaire conducted a poll via Tesla Inc.’s ersatz communications department, asking real people on the Internet whether he should sell roughly $20 billion worth of his shares in the company. The majority verdict: Yes. So there you have it. The masses have spoken.
Even in this market, the concept that the chief executive would offload that much exposure seems to have registered in the collective brain’s fear pit. Tesla fell by the equivalent of about $78 billion in early trading Monday, or roughly a Ford Motor Co. (it had recovered roughly half of that as of writing this). The official line — meaning, stuff Musk tweeted — suggested he had put together this exercise in bot democracy as a high-dudgeon response to calls for higher taxes on very, very rich persons such as himself.
Even at face value that might seem like a weird conflation of a personal itch with the whole managing-a-listed-enterprise thing. Yet, in another, shrinking corner of reality, it could be viewed as the CEO selling a big chunk of stock because it’s trading at a very high price. This quite often marks the moment when it occurs to any stockholder that it might be a good idea to sell some stock. Musk had hinted in an interview some months ago that tax considerations related to old (and now very lucrative) option grants might prompt a sale to cover the tab. One alternative might be for Musk to simply borrow more against the value of his Tesla stake. He has done so for years — roughly half of his stock was pledged as collateral as of August — and that stake is now worth more than $200 billion (plus options to be exercised).
In any case, he is obviously free to sell. The weirdness of contriving things such that the decision appears to turn on the outcome of an online poll fades when you remember who is contriving it. Musk has a long history of tweaking Tesla’s shareholders, regulators and the odd spelunker via social media. “Funding secured” remains the most obvious, and egregious, instance. But he also sowed doubt about the recently announced sale of vehicles to Hertz Global Holdings Inc. — which led both stocks to rally enormously — for little apparent reason other than that he could do so. Chaotic energy? Maybe. Or just boredom?
For Tesla itself, it hardly seems to matter; even after Monday morning’s initial sell-off, the stock price stands at around 175x forward earnings. One can of course make the usual observations about the metaphysical nature of Tesla’s “board” of “directors” and the risk this entails. Musk’s gratuitous, puerile insult to the chair of the Senate finance committee — also part of this weekend’s Twitter riffing — sticks out as a particularly lopsided trade.
Except, you know, “stock price, bro.” Plus, it is all very on-brand, since in 2021, Tesla has somehow become the embodiment of rebellion while sporting a trillion-dollar market cap. That Musk can seemingly spin cashing in as yet more audacity represents an apotheosis of sorts.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.
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