August 7, 2018
Elon Musk taught every CEO a dangerous lesson today. Musk, CEO of Tesla, tweeted today that
“am considering taking Tesla private at $420, funding secured”.
Greed Knows No Limit
Not only Elon Musk set a price target of $420, but he also followed up with another tweet minutes later that
“Shareholders could either to sell at 420 or hold shares & go private”.
It seems the purpose of this tweet is to twist the knife a bit more to ensure investors not selling Tesla stocks and “encourage” more buying to bring the stock price up to his target of $420.
It is one thing that some layman says the same thing, which is not capable of moving the market, it is entirely another when a celebrity CEO such as Elon Musk talks up his books like this.
I’m certain Elon Musk is sophisticated enough to know what he said and did may land him in legal troubles but why did he do it anyway? My assessment suggests Tesla is indeed in serious financial trouble as many analysts have warned, and this looks like Musk’s last ditch desperate attempt to hide the records from the public and the SEC before Tesla goes bust.
Tesla is the most shorted U.S. stock (for good reasons) and Elon Musk has a long standing feud with those short sellers. Musk has moved mountain and earth, laying off many workers and his bizarre earnings call notwithstanding, to keep up with the appearance that Tesla’s production ramp-up is on schedule to appease investors as it is sadly the only thing investors can find some consolation. He even went as far as borrowing personal loans to buy Tesla shares, a majority of them at the historical high, creating a less liquid market thus punishing the shorts.
I get that every CEO tends to think their company stock is under-valued due to something intangible the investing community has failed to take into consideration. However, the best way to crush the nay-sayer is to let the fact speak for itself. Make good product at good price dominating the market and let the profits show what your company is really worth.
Another reason Musk chose to make such moves is that the current weak SEC and a “tolerant” financial regulatory environment has emboldened almost everyone from the President, Central Banks to … Elon Musk to “dabble” in market moving “tweets” or acts and nothing would ever stick.
On a side note, I cannot help but mourn the loss of ethical standards in America today. I am not talking about some high moral ground, but the basic right from wrong.
The response to the Elon Musk’s tweets today centers around if $420 if really Musk’s target, how Musk came up with that valuation (why would anyone even bother to ask?). Most news media I read are in awe that Musk’s target of $420 will likely be met in no time. Musk also openly tweeted thanks to investor’s support. Yet nobody questions this previously considered taboo illegal act by a prominent CEO.