In the Meme-Stock Era, Even Bad Voltswagen Jokes Are Worth Billions

(Bloomberg Opinion) -- In a January column about how Elon Musk is basically in charge of the stock market now, I noted how others would try to copy the Tesla Inc. boss’s success in co-opting retail investors. I had one caveat, though: “Charming young Redditors in an authentic way isn’t an easy act to pull off.”   

This week Volkswagen AG provided a lesson in just how difficult it is to “be Elon.” VW’s U.S. arm claimed it was changing its corporate name to “Voltswagen,” denied it was an April Fools’ Day joke, then admitted that, um, it was in fact an April Fools’ Day joke gone wrong.  

The German giant has been riding a wave of investor excitement about its electric-car strategy. Thanks in part to some clever social media and marketing, VW seemed to have cracked Musk’s knack for share-price boosting publicity. The more frequently traded VW preference shares are close to a six-year high.

News of the purported name change helped VW’s American depositary receipts — the ones favored by U.S. retail investors — to climb as much as 12.5% on Tuesday. Which is where this cringeworthy incident goes from being a disastrous attempt at humor to something potentially more serious.

I’m not suggesting VW’s gaffe was an attempt to manipulate the stock market and I doubt the U.S. Securities and Exchange Commission would view it like that. It’s a reminder, however, that we now live in the meme-stock age where even bad jokes can add or subtract billions of dollars in market value. It’s a minefield for corporate executives to navigate.

In an era of fake news, the lighthearted April Fools’ Day tradition of companies spinning tall tales has lost its charm. Reporters from trusted outlets such as the Associated Press are furious at having been lied to by VW and made to look foolish. Unlike Tesla, which has long shunned advertising, VW has a massive marketing budget. It should be able to do better than this. A company that misled customers about its vehicles' diesel emissions needs to tread especially carefully.

It’s easy to say VW should just focus on building cars and leave the jokes to people who are actually funny. The company has an ambitious and convincing electric-vehicle plan and may soon leapfrog Tesla to become the world’s largest battery-vehicle manufacturer. But being ploddingly German is an impediment in today’s stock market. Despite being one of the planet’s richest people, Musk’s counterculture savvy and feisty irreverence has made him a hero for Redditors.

Tesla has weaponized its soaring share price to raise billions of dollars in cheap funding. That money pays for new factories and products and is a threat to established carmakers. VW must fund its investments via the cash it generates. Even after this year’s blistering run its share price is less than 10 times the value of its earnings. It would be self-defeating if VW didn’t try to be a bit “cooler.”  

There’s also a double-standard in play. We expect VW to be reliable, while Tesla gets to be quirky. Indeed, Musk gets away with things that others wouldn’t. For years Tesla has marketed an autopilot system called “Full Self Driving” that can’t yet drive entirely by itself — the timeline for when it will be able to do that always seems to be just around the corner.

And in 2018 Musk claimed on Twitter that he’d secured funding to take Tesla private, when in fact he hadn’t. Musk ended up paying a small fine and stepped down as chairman. But he remains as outlandish as ever, recently appointing himself Technoking of the company and his chief financial officer Master of Coin because the latter’s in charge of managing the $1.5 billion of Bitcoin Tesla purchased. Get it? None of this is a joke.

Following VW’s successful “Power Day” — a straight copy of Musk’s “Battery Day” event — I  quipped that it wouldn’t be long before VW boss Herbert Diess was appointed “TechnoKaiser.” Finance blog Zerohedge came up with the better punchline: “VW should go full Elon and file an 8K saying its new title is Voltswagen,” it tweeted. VW appears to have taken that tongue-in-cheek advice rather too literally. More fool them.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.

©2021 Bloomberg L.P.