There’s finally some Tesla (TSLA) shareholder momentum to fire Elon Musk

There lastly seems to be some Tesla shareholder momentum to fireplace Elon Musk from the corporate after years of considerations being ignored by the board and most shareholders.

Nonetheless, in all probability nothing will occur so long as the inventory (TSLA) is up.

For years, now we have expressed considerations about Elon Musk steering Tesla away from its mission to speed up the world’s transition to sustainable transport and power.

It has intensified over the past yr when Musk threatened Tesla shareholders to breach his fiduciary duties, fired Tesla’s total charging workforce in a kneejerk response, dove headfirst right into a worrying social media habit, shared numerous misinformation on social media, and financed politicians who’ve instantly attacked Tesla and whose insurance policies go instantly towards Tesla’s mission.

Most of those could be firable offenses at most corporations, however we additionally reported for years that Tesla has large governance points with the board mainly being utterly underneath Musk’s management regardless of him proudly owning simply 13% of the corporate.

This leaves issues within the palms of shareholders, who’re restricted to voting annually. Throughout Tesla’s shareholders assembly in June 2024, they made it clear that they’re nonetheless for Musk, with most of them voting according to what the board (aka him) beneficial.

For the reason that inauguration and Musk’s salutes, the blowback, and his response to the blowback, there appears to be extra traction amongst Tesla shareholders to take away him.

Presently, the preferred submit on the Tesla Investor Membership on Reddit, one of many largest Tesla shareholder communities, is about eradicating Musk as CEO of Tesla, and there have been just a few of a majority of these posts getting traction over the previous couple of weeks.

The submit targeted on Tesla’s lack of latest fashions aside from the Cybertruck within the final 5 years and the shortage of progress in supply volumes regardless of the remainder of the EV market rising.

It additionally makes the argument that Musk will not be following his personal guiding rules in the case of work dedication:

Assuming just a few issues…

Musk is nice at retaining organizations targeted on long run arduous to achieve targets

Musk is nice at managing engineering groups

Taking Musk’s personal phrases as reality: administration and engineers co-locating with manufacturing and “in particular person” on the workplace interactions are internet positives.

Taking Musk’s personal phrases as reality: staff not prepared to do #3 ought to transfer on.

Musk will not be doing #3 and thus is not performing #1 and #2 at Tesla for the mission. Moreover, along with his personal logic, he’s now within the group of staff that have been let go (#4).

This isn’t a nasty argument contemplating that, along with nearly main six corporations and understanding of the White Home for his new DOGE authorities division, he was caught actually tweeting about non-Tesla stuff in the course of Tesla’s earnings name final week.

All that whereas, he rages towards staff who earn a living from home as a result of he believes it’s much less productive.

Whereas many Tesla shareholders agreed with the submit, the principle objection was that “the inventory is up, why mess with one thing that works?”

That is certainly an issue for Tesla followers who need to see Musk go. With the board not doing something, it might come all the way down to shareholders voting the board out and forcing a confidence vote on Musk.

Shareholders are afraid that pushing Musk out would end in him promoting his inventory and triggering a giant correction in Tesla’s inventory.

Contemplating Tesla is at present buying and selling at an insane price-to-earnings ratio of 200 and nearer to 400 if you happen to take away ZEV credit and the Bitcoin acquire, would that be such a nasty factor if it meant realigning with the mission?

Electrek’s Take

Clearly, I don’t suppose we’d see that occur if there have been a confidence vote tomorrow. I believe the inventory would wish to come back all the way down to actuality to inspire shareholders to take motion.

Personally, I believe being fearful of a selloff due to Musk leaving is shortsighted. Tesla’s fundamentals are wanting worse by the day, and this quarter needs to be the worst in years.

If Tesla inventory doesn’t crash this quarter, Tesla will possible be buying and selling at a 500+ P/E after reporting Q1 2025 earnings. The final time Tesla traded at these ranges, Musk warned Tesla staff that the inventory would get crushed “like a soufflé being smashed by a sledgehammer” if it didn’t present revenue progress.

Just a few years later, Tesla is in a good worse scenario, contemplating earnings from its predominant enterprise, automotive, are literally crashing, whereas earnings from self-driving automobiles and robots are realistically nonetheless years away.

It’s true that eradicating Musk would possible end in a short-term inventory crash, however I believe it might be good for Tesla long-term.

First, Musk is undoubtedly negatively affecting Tesla’s gross sales. Eradicating him would possible give Tesla some respiration room in the case of demand.

Secondly, Musk has created an enormous legal responsibility for Tesla by constantly promising self-driving functionality on all automobiles produced since 2016. This must be addressed and stuck, and Musk is clearly not the particular person to do that.

Tesla wants management to realign the corporate with its mission and derisk the self-driving effort. I believe there’s room to nonetheless purpose for Musk’s grand imaginative and prescient for Tesla, however with out constantly mendacity and overpromising.

Name me loopy, however I believe the corporate would truthful higher with a reliable full-time CEO as a substitute of an egomaniac wannabe oligarch who constantly lies to shareholders, engages in useful resource tunneling along with his personal competing firm, and is deeply misplaced in one of many worst circumstances of social media habit that I’ve ever seen.