Tesla (NASDAQ:TSLA) CEO Elon Musk is an innovator and genius. As is common with unusually intelligent people, Musk has an eccentric, almost wild and carefree personality. This is the impetus for the company’s tremendously impactful innovations. But his undisciplined mannerisms — at least compared to the typical Wall Street suits — is also a liability.
During the middle of Tuesday’s trading session, Musk inexplicably used Twitter’s (NYSE:TWTR) social-media platform to disclose his intentions on taking the company private. The tweet was cryptic and the timing bizarre, something with which TSLA investors have been forced to come to grips lately. Musk simply wrote, “Am considering taking Tesla private at $420. Funding secured.”
Naturally, market analysts and observers had plenty to say. According to The New York Times, TSLA stock already received bullish sentiment on reports that a Saudi Arabian fund acquired a significant position in the company. But the specified buy out price represented nearly a 23% premium against Monday’s close.
The thinking, of course, is that buying anywhere below $420 is essentially free money.
But an even more curious detail is the disclosure’s manner and platform. Unless you’re the President of the United States, you usually don’t reveal critical news through Twitter. Nevertheless, Elon Musk technically didn’t break any laws or regulations.
As the Times reported, the Securities and Exchange Commission allows companies to use Twitter or Facebook (NASDAQ:FB) for announcement-making purposes. That said, market-moving announcements through social media must also be accompanied with a simultaneous public disclosure.
Between Musk’s cryptic tweet and the company’s clarification on the matter stood a several-hours gap. That could draw the SEC to sniff around, perhaps to look into a case of market manipulation.
To which I say, whatever. Elon Musk is a prima donna, and we’re better off without the drama.
For TSLA, Genius Didn’t Translate to Acumen
I don’t mean to make light of the situation. What I’m saying is that investors deserve a leadership team that takes every dollar seriously. And spare me the “we’re all leaders” line of corporate BS. Leadership starts at the top. If Musk insists on doing things his way or the highway, then the best of luck to him.
It’s clear now that as much as a genius as Elon Musk is, this attribute doesn’t translate to business acumen. Running a successful company, whether publicly or privately owned, requires more than just a great product. Products don’t sell themselves; people do. At some point, even the most brilliant organizations will implode if leadership and discipline isn’t up to snuff.
That’s what we’re seeing now with TSLA. Currently, shareholders are held hostage by a man-child, for lack of a better phrase. For instance, Musk complained that reporting quarterly earnings “puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long term.”
Hello? That’s the whole point about going public! You receive a massive capital influx in exchange for shared ownership. I certainly didn’t hear Musk complain when he got his first taste of serious money, nor when TSLA stock exploded over 800% since April 2013.
Another element that I didn’t care for was Musk’s constant attacks on short traders. Look, I get that CEOs of major organizations personally dislike naysayers. But you know what? Get over it! Bulls and bears make for a healthy market.
We can’t all bet on the same horse. If we do, either nobody makes money, or the entire enterprise collapses. Someone must be willing to take the other side of the trade. A genius like Musk should know this.
Elon Musk Relapses into “Muskiness”
In prior InvestorPlace articles, I expressed optimism for TSLA stock and confidence in Elon Musk. He’s a once-in-a-generation talent, and that can’t be taken away from him. I just wish that he would grow up a little bit and start acting like a responsible executive.
He made what I thought was significant progress in the company’s most recent earnings report. He not only kept his cool, but he apologized to those he offended in the prior, controversial conference call. That was a big move.
I’m afraid that goodwill was wasted. Musk doesn’t appear able to handle the pressures involved with leading a world-class organization. He’s best suited for innovation and product development. When it comes to running a major company, well, he can’t (or won’t) run himself.
Even more worrisome for TSLA stakeholders, Musk’s primary motivation for going private appears to be based on personal concerns. After all, he tweeted that this move would “save a lot of headaches.”
I don’t know if it makes much business sense. Plenty of public companies go private, but they usually have reasonable debt levels and positive cash flow. TSLA stock represents the exact opposite situation. Then again, business was never Elon Musk’s strong suit. Unfortunately, this was revealed in an ungraceful manner.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.