I don’t own any shares of Tesla Inc (NASDAQ:TSLA), nor do I plan to in the near future. I must admit, however, anytime I see a headline about Tesla CEO Elon Musk, I almost always give it a look. Love him or hate him, the guy is interesting. But if you haven’t read the recent interview Musk did with Bloomberg, it is quite the head-scratcher.
When I was reading it through the first time, however, I halfway suspected that Musk was trolling the reporter the entire time.
Here’s the “too long, didn’t read” summary: Stuck in traffic, Musk had an epiphany: Traffic could be avoided through a network of underground tunnels. Two months later, Musk founded a new company — “The Boring Company.”
In fact, even though the company doesn’t yet have permits to dig, he has already started tunneling in the SpaceX parking lot. He told Bloomberg he’s hoping to have permits by the time he hits the SpaceX property line. Indeed, his Twitter Inc (NYSE:TWTR) bio currently reads, “Tesla, SpaceX, Tunnels & OpenAI.”
TSLA Stock Investors Are Not Amused
Musk has a vision of thousands of miles of connected networks of underground tunnels with up to 30 different levels alleviating traffic congestion in the future. “It would certainly create a lot of jobs,” Musk said. “A trillion jobs. With a T.”
Obviously the trillion jobs remark is a joke. The name of Musk’s new venture, “The Boring Company,” may or may not be a joke, too. The idea that the CEO of a company trying to ramp up production by more than 550% in two years and disrupt the auto industry is starting a tunneling company is apparently not a joke. I read the article twice just to make sure.
The Potential Problem for Tesla Stock
Tesla stock wouldn’t be where it is today without Musk’s creative vision. If I were a TSLA shareholder, however, I would be somewhere between annoyed and concerned at this point.
Forget the name Elon Musk for a minute … If I told you there is a guy heading up a company working on driverless cars, but that the same guy is CEO of another company also working on colonizing Mars, you’d have to be a little bit skeptical. Then if I told you that the guy got the idea to build a complex network of underground tunnels out of the blue one day and within two months was already tunneling in the parking lot of his space travel company … I’ll stick to “concerning” as my adjective of choice for now, but maybe a different word comes to mind for you.
Clearly, Elon Musk is an extremely smart, capable guy. In addition, one of the biggest parts of a CEO’s job is putting great management in place below you. Musk is not running the day-to-day operations at all of the companies he is managing. But if I were invested in TSLA stock, The Boring Company interview would seriously have me asking myself some important questions about Musk.
Musk came from a very wealthy family. It seems clear his motivations behind projects such as SpaceX and OpenAI are much more about changing the world than about making money.
Are the decisions Musk makes at Tesla, such as his controversial buyout of debt-ridden SolarCity, the best moves for shareholders? Maybe Musk sees them as the best moves for the human race.
With TSLA stock valuations sky-high, TSLA stock trades strictly on Musk’s projections at this point. Is his judgment sound? Tesla has missed plenty of projections in the past.
Now Is Not the Time
The fate of the Model 3, the SCTY buyout, the construction of the Gigafactory and the success of General Motors Company’s (NYSE:GM) award-winning Chevy Bolt make 2017 the most critical year in Tesla’s history.
Is it good judgment for the CEO to start up brand new companies on a whim during such a crucial time? How much thought is Musk even putting into his actions when he’s already drilling less than two months after coming up with the idea?
I don’t have the answers to these questions, and nobody can predict the future. If Musk pulls off all of the stunts he’s trying to pull, he will go down as one of the most brilliant human beings of all time. His name will be mentioned alongside Thomas Edison and Leonardo da Vinci as one of the most influential thinkers of all time.
In the meantime, TSLA stock holders would probably appreciate it if he focused on one world-changing aspiration at a time. Namely, they’re only concerned about the one with a $40 billion market cap and a 500,000-car deadline quickly approaching.
As of this writing, Wayne Duggan did not hold a position in any of the aforementioned securities.
