I was asked for my thoughts regarding the latest machinations with Tesla™, Hertz™ and Elon Musk’s surprisingly negative (however, possibly truthful) tweet. For those that may have missed the story, here’s a brief recap for context…
Hertz said it is buying 100,000 Teslas, will both build more charging stations and have access to Tesla’s own for its rental customers. Tesla, the stock, along with Hertz went skyrocketing to “The moon!” So much so, Tesla alone added some $300Billion in addition to its market cap gaining it ~$500Billion aka “Half a $Trilly!” in just three weeks. Hertz, a recent bankruptcy exit, found its own shares going from “zero to hero!” status in even less time. So that’s the gist of it. i.e., 100,000 Teslas are now worth over a half a $Trillion dollars of combined market cap. Who knew! But I digress.
Then, out of nowhere, came the following. To wit:
The above is, of course, a celebration into the sheer lunacy of why Tesla is supposedly now worth more than all other car companies combined that sell millions of cars per quarter, with a one time sale that will, using recent sales numbers, boost them to somewhere in the 350K range. So again, go figure. Yet, what has everyone perplexed is the “why” in relation to Mr. Musk’s, seemingly, cold water toss. Here’s my take…
Tesla’s share price has run so high, so far and so fast, that it provided (whether true or not) Mr. Musk the perfect opportunity to put on the record a possible “get out of jail card” whenever he has to answer to the SEC or others. i.e., That he tweets as to only pump up his share prices. He can now point to this incident and declare with authority: “I’m sorry, but you are wrong – and here’s the proof!”
See what I mean?
If any fallout from that message (tweet) would have incurred, it would have been minimal in regards to where Tesla was only weeks ago.
Example: Imagine if it sunk the stock 25% e.g., ~$300Billion?
That would have only (yeah, I know right?) to ~$900 which is precisely where it was only a week or so prior, and, was itself (although just barely) another lifetime high.
So, what was the risk reward?
If you’re Elon Musk and you are well aware that the SEC and other agencies are more than reasonably assumed chronologically documenting your every tweet to use against you if needed, and already have?
It’s called “Priceless.” And that’s why, I believe, he did it.
Also, from a business and legal standpoint, if I were one of those at the “should he or shouldn’t he tweet?” advising table. I would have both endorsed it, as well as hoped I was the one who advised him to do it. Because…
It’s probably going to prove the most consequential tweet he’s ever done, for it makes the “Funding secured” tweet moot for any future litigation.
If it was intentional for precisely that fact? It’s brilliant.
If it was unintentional and was just Elon being Elon?
The results will still be the same.
© 2021 Mark St.Cyr