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Elon Musk's noise machine is on hyperdrive these days.
A Delaware court has ruled that his pay package as Tesla CEO is invalidated. The report alleges that Tesla board members felt pressured to take illegal drugs to keep Musk in a good mood. And this week, we hear the drumbeat of negative analyst chatter from Daiwa and Piper Sandler.
It is always difficult to separate noise from the fundamental. This is especially true for Tesla. Investors have so far been rewarded for ignoring Musk's shenanigans. But with the stock down 27% this year and more than 50% off its all-time high in 2021, it pays to take another look.
The main reason for the stock price decline has little to do with Musk's off-campus activities. As he said on Tesla's last conference call, the company is currently “between two major waves of growth.” At least that's in the aftermath of one.
So should investors continue to ignore the noise and wait for the next wave, whenever it occurs?
Some longtime Tesla owners are holding out. Ross Gerber's company, Gerber Kawasaki, held 398,000 shares at the time of its last filing in December. He told Yahoo Finance that he had reduced his holdings, but was willing to sell the majority of the shares on behalf of his clients, partly for tax reasons and partly because he saw long-term opportunities. He said he continues to hold it.
“The cost of Mr. Elon's actions is really hurting shareholders, and it's very disappointing because the reason we own our stock is because Tesla's long-term potential is enormous,” Gerber said. told Yahoo Finance. twenty two. ”
Oppenheimer's Colin Rush, who has a Market Perform rating on the stock, is waiting for margins to improve and stabilize before becoming more bullish on Tesla.
“The second thing we want to see is the evolution of FSD. [full self-driving] Technology and practical adoption. The regulatory environment remains in flux. “I think as we get more clarity, we'll have a better understanding of how this technology works and how it can be monetized,” he told his Yahoo Finance.
In the meantime, it remains to be seen whether the noise regarding board independence will become a fundamental problem. The attitude of longtime Tesla fans has usually been, “Who cares if Musk does drugs?” Even if the board is paying him an astronomical amount of money (and the board itself is compensated more than any other company's board members), who cares? So what's going on because he's posting a lot on his X? He's building the future!
The real question is how consistent, and even how expansive, that future will be if Musk is occasionally challenged from within.
Gautam Mukunda, a lecturer at the Fletcher School of Law and Diplomacy and author of Choosing a President, said: Test their ideas and prevent worst-case mistakes. ”
