TSLA: Why Elon Musk Doesn’t Sweat Tesla Stock

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Tesla (TSLA) co-founder and CEO Elon Musk — the modern-day Renaissance man, genius and multibillionaire entrepreneur — doesn’t pay much attention to Tesla’s stock price.

tesla d tsla stock

Source: Tesla

And this is a guy who owns about 30% of the company.

Tesla really became a household name when shares of the electric automaker began their meteoric rise last year. Between March 2013 and September 2014, TSLA stock went absolutely bonkers, soaring some 740% from trough to peak.

As one of TSLA’s largest shareholders, Musk himself was along for the whole ride, and his stake in the company is now worth somewhere in the ballpark of $8 billion.

So … why wouldn’t he pay more attention to the Tesla stock price?

Musk Is in It for the Long-Term

In a recent Bloomberg interview, Musk was asked about the Tesla Model D tweet he sent out: was he surprised that TSLA stock jumped a few percent on his tweet alone? Musk coolly responded that he didn’t pay much attention to Tesla’s stock price, and went on to essentially confirm that he thought the current levels of TSLA stock were a little frothy:

“It does seem as though, you know, for a company that had a few billion dollars in revenue last year to have a 30-plus billion dollar market cap is on the high side.”

So not only doesn’t he seem to pay notice to the daily fluctuations of TSLA stock … but when he does, he doesn’t think Tesla shares are all that attractively valued!

Of course, this isn’t the first time Musk has questioned TSLA stock valuations — he most recently did it last month, but in far less ambiguous fashion:

“I think our stock price is kind of high right now to be totally honest. If you care about the long term, Tesla, I think the stock is a good price. If you look at the short term, it is less clear.”

But here’s where Musk hits on the reason why he doesn’t care about the day-to-day fluctuations: He’s a long-term investor, and he has proven over and over again that he knows how to invest.

Musk was a big part of the early PayPal team, a payment processing company owned by eBay (EBAY) that soon will be spun off into its own company in 2015. Musk is chairman and the largest shareholder of solar energy system provider SolarCity (SCTY). He founded a space transport company, SpaceX, that produced the first commercial spacecraft to dock with the International Space Station. He’s worth over $11 billion.

So, Musk isn’t the worst person to take some investing advice from.

And he’s still one of Tesla’s biggest believers. In the Bloomberg interview, he elaborates, saying that for long-term holders of the stock:

“I think there’s a lot of appreciation that will occur in the long-term. In the short term it’s difficult to predict these fluctuations.”

And:

“I don’t think they should sell the stock, I think it will appreciate and ultimately be much higher than it is today.”

Elon Musk’s attitude toward the Tesla stock price doesn’t reflect apathy, it just reflects confidence.

There’s a big difference.

As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid.


Article printed from InvestorPlace Media, https://investorplace.com/2014/10/tesla-stock-elon-musk-tsla/.

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