Am I a Fan of Elon Musk? – Wolves And Finance

Elon Musk is one of the most famous and successful entrepreneurs in the US right now. In this video, I am going to share my thoughts on the successes and failures of Elon Musk.

VIDEO SUMMARY

Here at Wolves and Finance we make business videos. An obvious question for me is “Zach, are you a fan of Elon Musk?” The short answer is yes, I am a fan. I am a follower on Twitter. I think he is funny. He is obviously successful. However, I do not own any positions in Tesla stock, and I will explain why in this video.

Let me start with the disclaimer, that TSLA stock is publicly traded. This video is not investing advice. My financial situation will be different from yours, so before you trade in TSLA stock or any stock, please talk with a professional financial advisor.

Let me also say, that this video will contain some criticism of Elon Musk. Now I realize that it is ironic for me to give criticism to one of the richest men in the world. He is rich. I am not. So, what right do I have to say anything negative about how he runs his business? In many ways, money speaks for itself. Elon Musk has built several successful businesses, which is an amazing accomplishment, and I think everyone acknowledges that. However, that does not mean he is perfect. He makes mistakes like everyone else. I would think that even he would admit that he is not perfect. At least I hope he would admit that. And he is a public figure, so I think it is fair game for us to look at those mistakes and learn from them. We are all here with the goal of becoming better businesspeople. So, I think it is worth it to take a brutally honest look at Elon Musk.

Let us start with Tesla stock. When I look at a financial statement, one of the first things I look at is, “who is on the board of directors?” If we look at the Tesla board, the first thing we see is that Elon’s brother is on the board. That is curious. Elon’s brother is always going to vote with him. This means that for any board vote, Elon starts with 25% of the vote. If we look at the other board members, there are not any other really strong voices. I do not want to smear any of these people. They do have impressive resumes, but they are not as impressive as they could be. Elon Musk could get anyone in the world to be on his board. He could have gotten the smartest minds in science and business, but he did not. Instead, he got these people, and you have to ask why? It looks like he wanted a board he could control. Why is this important? Because the purpose of a board is to look after shareholder interests. If you are going to buy TSLA stock, and there is a weak board, there is no one looking out for your interest. This is one of the big criticisms of Elon Musk is that sometimes he looks out for his own interests at the expense of the shareholders. The appointment of his brother to the board is blatant nepotism. And it is at the highest levels of this company.

Next, Elon Musk shows a consistent disdain for Wallstreet. He will get on earnings calls and berate analysts. Here is a video clip to show you one example.

Just to be clear, this is an example of what you should NOT do as a businessperson. Do NOT act like Elon Musk. If investors are willing to give you money for your business, do not treat them like this. Be aware, this is just one example. He has been doing this for years. His actions show he does not care about his investors. It is the same attitude he shows when he chose a weak board.

These types of actions result in bad business decisions. The example that drives me the most nuts, is in another one of Elon’s companies called The Boring Company. One of the biggest projects of this company is drilling tunnels. Elon Musk proposes that best way to solve traffic problems is to dig tunnels under cities and install elevators to raise and lower cars into the tunnels. He started with a test case in Los Angeles. To me, this screams engineering gone out of control. Do you know how expensive it is to dig tunnels in Los Angeles where they have tar pits and earthquakes? It seems like they are pursuing engineering ideas without any consideration of the business case.

I bring this up, because there is a previous business case that shows this is such a bad idea. They built a subway system in Los Angeles, and it was a financial disaster. This is another example of digging tunnels under the city as a way to reduce traffic. The project came in massively over budget and cost $1.45B for 4.4 miles of subway. A lot of people could walk 4.4 miles for free. Don H. Pickrell, chief economist for the U.S. Department of Transportation’s research center at Cambridge, Mass said, “This thing is, by far, the most expensive public works project in the history of the world for what is being delivered.”

So for The Boring Company, is there really a business case for investors? Or is this another example of Elon Musk doing whatever he wants?

This brings us to Twitter, the highly publicized hostile takeover. Just this week, Elon Musk announced he is walking away from the deal, which he cannot do because he already agreed to purchase them. This means that the whole thing will play out in court over many years, costing everybody a lot of money. Personally, I think the concept of new management at Twitter could create a lot of value. But the way Elon Musk is going about it is destructive. During the process, he has been publicly attacking the current Twitter CEO. In the exchange, Elon Musk tweeted out a poop emoji. He is making this transaction personal, when it should be a normal business transaction. You should not conduct a $44B transaction with a poop emoji. Just to be clear, this is an example of what you should NOT do as a businessperson. Do NOT act like Elon Musk. This is not how you should perform an acquisition. You especially do not want to carry out an acquisition in court, because then the only people who will make money will be the lawyers.

Elon Musk has been the subject of past complaints from the SEC. Elon complains that the SEC is harassing him. But the SEC is just doing their job. The poop emoji is just another example. When you put out a public offer to acquire a company, there are real investor dollars involved. What you are supposed to do is put forward your offer, and then go silent as the accountants and lawyers work out the details. You are not supposed to get in a public twitter war with the CEO. Elon Musk’s poop emoji puts everyone’s money at risk.

So, those are just a few examples of what I think about Elon Musk. I think he is a smart, funny, successful guy, but I will not invest in his companies. As an investor, you step back and look at your options. If you want to invest in the electric car market, there are other companies you can invest in. Why would you choose to invest with someone who very publicly shows that he does not care about the investor’s interests.

Tesla stock has been in a downward slide recently. It is currently at $752. In my opinion, looking at company financials, TSLA should be trading at 1400. It should be double what it currently is trading at. I think it is possible to double the stock price in six months, and it would not even be that hard. The reason why the stock stays low, is because of Elon Musk. Elon Musk and his poop tweets are keeping his stock price down, because investors are going to go somewhere else.

If I worked for Elon Musk, we would literally get in fist fights in the hall every day. Unfortunately, I think Elon Musk is so rich and powerful, that a lot of people are scared to openly criticize him. But I would tell him exactly what I think. He needs to fire his brother, be nice to Wallstreet investors, stop digging tunnels everywhere, and stop tweeting poop emojis. And at that point, he would probably punch me in the face.

Leave a comment down below letting me know what you think!

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Neither Zach De Gregorio or Wolves and Finance shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.