Electric Gene

Tesla’s CEO Elon Musk seems to have the magic touch. Last week, Tesla’s stock price hit 8.8 billion, yes, billion with a b. That number beats Fiat by about a billion and it is three times the price of Citroen, the French carmaker that has been around for 125 years. According to industry insiders this achievement can be clearly linked to two things. First Tesla just released a new car; the Model S sports car received the highest score in Consumer Reports’ ratings, a 99 out of 100. Secondly, Mr. Musk has been skirting SEC regulations, and Tweeting up a storm about the company. This Tweeting trend represents a new phenomena, one just recently pick up by both Mr. Musk and Warren Buffet. With this new direct message technology now in use by CEO’s, they can directly affect stock prices thus boosting or tanking the stock depending on their skill and message. In the case of Mr. Musk he clearly has the skill to tweet properly, but hopefully he will also have the skill to live up to his stock price.

Source: http://www.autonews.com/apps/pbcs.dll/article?AID=/20130513/OEM02/305139944/musks-magic-touch-on-wall-st#axzz2TCScLhR6

5 comments to Electric Gene

  • asher

    If you read my previous post about Tesla’s soaring stock and new-found profitability, I mentioned the company’s prospective expansion into the mass-market (rather than just luxury).

    However I think that we need to be careful about creating a cult of personality around CEOs, as has been done with Sergio Marchionne. Yes, Musk certainly has an electric personality and an entrepreneurial spirit, but it is hard to believe that the stock will keep rising even if the company has success with a mid-tier vehicle. I also noted the comments about Musk’s twitter feed and how it related to stock prices, but haven’t companies always done this type of self-aggrandizing promotion?

    What does the company need to do to meet expectations? What are its plans? What is so special about Mr. Musk’s tweeting?

  • Comparisons with PSA (Citroen is part of Peugeot) and Fiat are probably not meaningful, given the depths of the recession in Europe. PSA in particular has little diversification (Fiat at least is a leader in Brazil and Turkey), so simply surviving is an issue.

    What is the P/E ratio of Tesla? Even if it successfully develops, launches, and sell a mid-sized car, those profits are years away, the costs are up front. So maybe I should “short” the shares of Tesla and go long on Fiat-Chrysler…

  • andrew

    Maybe, shorting the stock in the long-run might be a good idea. However, for now even if the company does not make a profit the instant communication skills of Musk and the tool of Twitter has kept the stock afloat. Mark my words the one day Musk miss tweets or losses good favor will Wall Street, the stock will plummet like a rock.

  • tommd13

    Over the past seven weeks Tesla stock has risen over 150% as stated by the WSJ in todays paper, that is incredibly impressive for a company of any sort. Tesla’s CEO has done everything right thus far and we will just have to see if these changes he is making are for the short run or the long run. The use of Twitter helps get real time messaging out to the masses while also gaining real time feedback from the customers which is very helpful for the company.

  • kuveke

    Several articles have come out in the last two or so days postulating that Tesla’s stock price is a bubble and a big one at that. While that is not to say it won’t continue more than anything the company is being evaluated based on its potential not what its actually worth. Once we begin to see the real profit potential of the company and the volumes that can be expected to be sold in the future the stock evaluations will stabilize. A brief comment about Musk. As Andrew notes Musk is a powerhouse at garnering publicity (A sort of anti-Waggner) and the debacle with the dealerships is only increasing the companies publicity. I don’t know whether or not that publicity will help or hurt stock prices but it certainly draws in investors interest.

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