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He loses it. This thought crossed my mind by reading the extraordinary email exchange between Elon Musk and a journalist from Buzzfeed News. Why on Earth would he restart the conversation with the "boys of the pedo"? This irrational personal behavior is not creative for Tesla shareholders – or the stakeholders of its private entities such as SpaceX and Boring Company – but there is no separation between Tesla and Elon. The valuation of the title is based on the perception that the market has of him as a visionary genius, but his penchant for the creation of useless clashes makes me doubt his mental state.
Believe me, I can recognize the signs of a stress-related crisis. I see the similarities of personality between Musk and me. I was also born in 1971. I also have trouble sleeping, even though I do not take Ambien. As an entrepreneur, I know that the combination of stress and pressure exerted by the support of others can lead to a short temperament and a thin skin. I've been known to drop some f bombs into business conversations, but when the CEO of a public company does, like Musk did with the buzzfeed reporter, he must know that he hurts those who work for him.
Musk's personality can also be interpreted as a negative form. I have also been fortunate to have spent the last 26 years of my life following the automotive industry in one way or another and I have learned one thing: it's not that hard to make a car. I've personally seen workers in countries where the average level of education was well below that of the Bay Area in the United States, who manufactured cars that did not require as much offline assembly. Sources in the automotive industry have confirmed the need to produce a model 3 ready to be used by the customer.
So, having a micromanaging boss sleeping on a couch in the office can actually make things worse for Tesla from the point of view of manufacturing. No CEO wants to hear that his presence is destructive, and I certainly do not take the trouble to criticize my small business, Portfolio Guru LLC. Good intentions and strong will, however, are not necessarily a creative combination of value.
FILE – On June 14, 2018, Elon Musk, CEO of Tesla, speaks at a press conference in Chicago. Tesla forms a special committee to evaluate Musk's plan to take the company privately. The electric car manufacturer announced Tuesday, August 14, 2018 that the committee would include three independent directors. The committee is yet to receive a formal proposal from Musk on a pending private transaction. (AP Photo / Kiichiro Sato, File)
But would Tesla's shareholders be better off without Musk's zeal, self-confidence, and ability to raise capital? No of course not. So, as much as I can empathize with the current state of Musk, I know there is no justification for valuing Tesla's shares without him.
The idea that a CEO could announce that he had secured a "secured financing" for a private takeover of his business, and then reverse the course in 17 days, is far from being completed. I have certainly never seen anything like it, and I wonder what Tesla's advice is about Musk's current mental state. In other such situations, Uber's former CEO, Travis Kalanick, is one example – the CEOs took temporary leave that became permanent.
A departure from Tesla's Musk – even if it was short-term leave – would, in my opinion, be a blow to Tesla's action. It's not just about market sentiment. A prolonged decline in the value of Tesla shares would have serious repercussions on the solvency of the company and its ability to operate until 2019.
As I noted in this Forbes Tesla has $ 920 million of convertible notes maturing on March 1, 2019, with a conversion factor of $ 359.87. As this date approaches, any sharp drop in Tesla's share price – as we saw last week – makes the cash settlement potential of these converts very real. I do not think the company can afford it.
Also, as I noted in this Forbes column, Musk heavily leveraged its Tesla shares, probably using them as collateral to finance its other businesses. These figures are published once a year in the company's proxy statement and are based on December 31st figures from the previous year. So, there is really no way of knowing how much Musk's assets are being wrecked today, but I think it's safe to assume that much of his personal holdings is still subject to to margin requirements. Again, there is no way to know at what price these margin calls would be triggered, but given that Musk owned 33,737,921 Tesla shares during its last SEC Form 4 filing on June 13th, this clearly represents a huge surplus.
So there is a downward slide in the action of Tesla. It's a vicious circle that I've already seen with other companies. Of course, the short sellers, the sworn enemies of Musk, are also very aware of these realities.
As a 47-year-old colleague, I appreciate Musk's contributions to the industry. As a former automotive analyst, I appreciate the fact that Tesla has pushed the auto industry into its collective pants and obtained notorious gestures from car manufacturers to adopt a massive production strategy of battery electric vehicles.
As an asset manager, however, I recognize that Tesla shares have an exaggerated valuation, even after the recent downturn, compared to the company's potential cash generation. The numbers do not work for the Tesla stock and have never been. If the CEO does not work, for whatever reason, this stock has considerable disadvantages. I will continue to read articles from online news agencies and Twitter accounts, although I find both methods unacceptable. Losing money is much more reprehensible.
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He loses it. This thought crossed my mind by reading the extraordinary email exchange between Elon Musk and a journalist from Buzzfeed News. Why on Earth would he restart the conversation with the "boys of the pedo"? This irrational personal behavior is not creative for Tesla shareholders – or the stakeholders of its private entities such as SpaceX and Boring Company – but there is no separation between Tesla and Elon. The valuation of the title is based on the perception that the market has of him as a visionary genius, but his penchant for the creation of useless clashes makes me doubt his mental state.
Believe me, I can recognize the signs of a stress-related crisis. I see the similarities of personality between Musk and me. I was also born in 1971. I also have trouble sleeping, even though I do not take Ambien. As an entrepreneur, I know that the combination of stress and pressure exerted by the support of others can lead to a short temperament and a thin skin. I've been known to drop some f bombs into business conversations, but when the CEO of a public company does, like Musk did with the buzzfeed reporter, he must know that he hurts those who work for him.
Musk's personality can also be interpreted as a negative form. I have also been fortunate to have spent the last 26 years of my life following the automotive industry in one way or another and I have learned one thing: it's not that hard to make a car. I've personally seen workers in countries where the average level of education was well below that of the Bay Area in the United States, who manufactured cars that did not require as much offline assembly. Sources in the automotive industry have confirmed the need to produce a model 3 ready to be used by the customer.
So, having a micromanaging boss sleeping on a couch in the office can actually make things worse for Tesla from the point of view of manufacturing. No CEO wants to hear that his presence is destructive, and I certainly do not take the trouble to criticize my small business, Portfolio Guru LLC. Good intentions and strong will, however, are not necessarily a creative combination of value.
FILE – On June 14, 2018, Elon Musk, CEO of Tesla, speaks at a press conference in Chicago. Tesla forms a special committee to evaluate Musk's plan to take the company privately. The electric car manufacturer announced Tuesday, August 14, 2018 that the committee would include three independent directors. The committee is yet to receive a formal proposal from Musk on a pending private transaction. (AP Photo / Kiichiro Sato, File)
But would Tesla's shareholders be better off without Musk's zeal, self-confidence, and ability to raise capital? No of course not. So, as much as I can empathize with the current state of Musk, I know there is no justification for valuing Tesla's shares without him.
The idea that a CEO could announce that he had secured a "secured financing" for a private takeover of his business, and then reverse the course in 17 days, is far from being completed. I have certainly never seen anything like it, and I wonder what Tesla's advice is about Musk's current mental state. In other such situations, Uber's former CEO, Travis Kalanick, is one example – the CEOs took temporary leave that became permanent.
A departure from Tesla's Musk – even if it was short-term leave – would, in my opinion, be a blow to Tesla's action. It's not just about market sentiment. A prolonged decline in the value of Tesla shares would have serious repercussions on the solvency of the company and its ability to operate until 2019.
As I noted in this Forbes Article, Tesla has $ 920 million of convertible notes maturing on March 1, 2019, whose conversion factor is $ 359.87. As this date approaches, any sharp drop in Tesla's share price – as we saw last week – makes the cash settlement potential of these converts very real. I do not think the company can afford it.
Also, as I noted in this Forbes column, Musk heavily leveraged its Tesla shares, probably using them as collateral to finance its other businesses. These figures are published once a year in the company's proxy statement and are based on December 31st figures from the previous year. So, there is really no way of knowing how much Musk's assets are being wrecked today, but I think it's safe to assume that much of his personal holdings is still subject to to margin requirements. Again, there is no way to know at what price these margin calls would be triggered, but given that Musk owned 33,737,921 Tesla shares during its last SEC Form 4 filing on June 13th, this clearly represents a huge surplus.
So there is a downward slide in the action of Tesla. It's a vicious circle that I've already seen with other companies. Of course, the short sellers, the sworn enemies of Musk, are also very aware of these realities.
As a 47-year-old colleague, I appreciate Musk's contributions to the industry. As a former automotive analyst, I appreciate the fact that Tesla has pushed the auto industry into its collective pants and obtained notorious gestures from car manufacturers to adopt a massive production strategy of battery electric vehicles.
As an asset manager, however, I recognize that Tesla shares have an exaggerated valuation, even after the recent downturn, compared to the company's potential cash generation. The numbers do not work for the Tesla stock and have never been. If the CEO does not work, for whatever reason, this stock has considerable disadvantages. I will continue to read articles from online news agencies and Twitter accounts, although I find both methods unacceptable. Losing money is much more reprehensible.
