There lastly seems to be some Tesla shareholder momentum to fireside Elon Musk from the corporate after years of considerations being ignored by the board and most shareholders.
Nevertheless, most likely nothing will occur so long as the inventory (TSLA) is up.
For years, we now have expressed considerations about Elon Musk steering Tesla away from its mission to speed up the world’s transition to sustainable transport and power.
It has intensified over the past yr when Musk threatened Tesla shareholders to breach his fiduciary duties, fired Tesla’s complete charging group in a kneejerk response, dove headfirst right into a worrying social media dependancy, shared numerous misinformation on social media, and financed politicians who’ve instantly attacked Tesla and whose insurance policies go instantly towards Tesla’s mission.
Most of those can be firable offenses at most corporations, however we additionally reported for years that Tesla has large governance points with the board mainly being fully beneath Musk’s management regardless of him proudly owning simply 13% of the corporate.
This leaves issues within the arms of shareholders, who’re restricted to voting annually. Throughout Tesla’s shareholders assembly in June 2024, they made it clear that they’re nonetheless for Musk, with most of them voting in keeping with what the board (aka him) really helpful.
Because the inauguration and Musk’s salutes, the blowback, and his response to the blowback, there appears to be extra traction amongst Tesla shareholders to take away.
At the moment, the most well-liked put up on the Tesla Investor Membership on Reddit, one of many largest Tesla shareholder communities, is about eradicating Musk as CEO of Tesla, and there have been a number of of these kinds of posts getting traction over the previous couple of weeks.
The put up centered on Tesla’s lack of recent fashions aside from the Cybertruck within the final 5 years and the shortage of development in supply volumes regardless of the remainder of the EV market rising.
It additionally makes the argument that Musk will not be following his personal guiding rules in the case of work dedication:
Assuming a number of issues…
- Musk is sweet at retaining organizations centered on long run onerous to succeed in targets
- Musk is sweet at managing engineering groups
- Taking Musk’s personal phrases as reality: administration and engineers co-locating with manufacturing and “in individual” on the workplace interactions are internet positives.
- Taking Musk’s personal phrases as reality: staff not keen to do #3 ought to transfer on.
Musk will not be doing #3 and thus is now not performing #1 and #2 at Tesla for the mission. Moreover, along with his personal logic, he’s now within the group of staff that have been let go (#4).
This isn’t a foul argument contemplating that, along with just about main six corporations and understanding of the White Home for his new DOGE authorities division, he was caught actually tweeting about non-Tesla stuff in the midst of Tesla’s earnings name final week.
All that whereas, he rages towards staff who earn a living from home as a result of he believes it’s much less productive.
Whereas many Tesla shareholders agreed with the put up, the principle objection was that “the inventory is up, why mess with one thing that works?”
That is certainly an issue for Tesla followers who need to see Musk go. With the board not doing something, it might come all the way down to shareholders voting the board out and forcing a confidence vote on Musk.
Shareholders are afraid that pushing Musk out would end in him promoting his inventory and triggering a giant correction in Tesla’s inventory.
Contemplating Tesla is presently buying and selling at an insane price-to-earnings ratio of 200 and nearer to 400 when you take away ZEV credit and the Bitcoin achieve, would that be such a foul factor if it meant realigning with the mission?
Electrek’s Take
Clearly, I don’t assume we’d see that occur if there have been a confidence vote tomorrow. I believe the inventory would want to return all the way down to actuality to encourage shareholders to take motion.
Personally, I believe being petrified of a selloff due to Musk leaving is shortsighted. Tesla’s fundamentals are wanting worse by the day, and this quarter must be the worst in years.
If Tesla inventory doesn’t crash this quarter, Tesla will seemingly be buying and selling at a 500+ P/E after reporting Q1 2025 earnings. The final time Tesla traded at these ranges, Musk warned Tesla staff that the inventory would get crushed “like a soufflé being smashed by a sledgehammer” if it didn’t present revenue development.
A number of years later, Tesla is in an excellent worse scenario, contemplating earnings from its foremost enterprise, automotive, are literally crashing, whereas earnings from self-driving vehicles and robots are realistically nonetheless years away.
It’s true that eradicating Musk would seemingly end in a short-term inventory crash, however I believe it might be good for Tesla long-term.
First, Musk is undoubtedly negatively affecting Tesla’s gross sales. Eradicating him would seemingly give Tesla some respiration room in the case of demand.
Secondly, Musk has created an enormous legal responsibility for Tesla by persistently promising self-driving functionality on all vehicles produced since 2016. This must be addressed and glued, and Musk is clearly not the individual to do that.
Tesla wants management to realign the corporate with its mission and derisk the self-driving effort. I believe there’s room to nonetheless purpose for Musk’s grand imaginative and prescient for Tesla, however with out persistently mendacity and overpromising.
Name me loopy, however I believe the corporate would honest higher with a reliable full-time CEO as an alternative of an egomaniac wannabe oligarch who persistently lies to shareholders, engages in useful resource tunneling along with his non-public competing firm, and is deeply misplaced in one of many worst circumstances of social media dependancy that I’ve ever seen.
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