Elon Musk hurting Tesla Stock
(This story is available temporarily here while a bug on the Forbes site makes it invisible.)
Dave Chappelle called Elon Musk up on stage Sunday during the comedian’s show with Chris Rock at the Chase Center in San Francisco. The audience reacted with a mix of applause and booing for a remarkably long time.
While there was significant applause, he’s overestimating in saying it was 90% — and indeed when the applause faded to quiet, as he writes above, the booing became overwhelming. Dave Chappelle is a major opponent of “woke cancel culture,” which Musk has described as a serious threat to society, and his audience is more inclined to support Musk on that than most.
Elon Musk has a history of wanting to live his life not caring what other people think — a generally admirable goal. He doesn’t censor himself the way most highly successful people do, and presumably feels he can afford it.
For a long time, Elon Musk’s “brand” revolved around his great accomplishments — revolutionizing fields like cars, space travel, and others, when most people thought he was crazy. A pure accomplishment-based brand is a fantastic brand to have, and presumably how Musk sees his own brand, though he’s also aware, just from his Twitter following, just how much personal brand he has established.
In the automobile industry, however, brand is historically incredibly important. When car buyers are surveyed on what factors led them to choose the car they did, the strongest factor is the “nameplate” — the brand image of the manufacturer. People buy cars for many reasons, but this is the strongest. They buy both because of the reputation of the brand, but also because of what driving a car with that logo will say about themselves — to themselves and to others. Almost all car makers spend huge amounts on advertising to strengthen that band — all but Tesla, which does not advertise, and stands on what the press and other people say about the qualities of the car. Tesla even famously disbanded its PR department, finding no value in encouraging better press coverage. (And indeed, the press, including this site, cover Tesla perhaps more than any other automaker.)
(It is worth noting that car buyers say that safety is their #1 factor in choosing a car, but deeper research on deeds rather than statements, suggests safety is down around #7.)
This reputation extends into the stock market, which has valued Tesla as more than any other automaker, indeed more than most of them combined. This is not based on their current financial results and sales, but an expectation that it will become the dominant player in the future. It’s been a fantastic investment — until 2022, a year which has seen the price fall from $400 to $168, though many other companies have suffered similarly in this market.
Brand is what other people think Elon Musk’s personal brand has arguably become a major component of Tesla’s brand. While some think the company would be better off without him, the case is strong that if he departed the company its stock price would tumble. While one can’t confirm such hypotheticals, there has been a noticeable increase in anti-Tesla sentiment correlated with anti-Musk sentiment coming from his actions after purchasing Twitter.
Musk’s problem is he doesn’t want to care what other people think, but personal brand is nothing but what other people think. As much as one might like it to be an objective measure of accomplishment, the market is not so kind.
TIME Person of the Year
Musk was Time's person of the year last year. The magazine identified him as controversial, but his brand around this time was mostly about his great accomplishments. That story has changed.GETTY IMAGES FOR TIME This is strongest at a place like Twitter. Musk wants Twitter to be the “global town square,” but that’s anathema with Twitter being seen as having a position on big issues, like Covid, or politics. As soon as Twitter becomes seen as having a “side” it will have problems being a place where everybody comes together. This is complicated because even issues like how to support free speech — or even whether to support free speech — have become polarized. Any move in that direction turns it into Parler or Truth Social or the message board of the Daily Kos. These can be successful platforms, but not a global town square.
Likewise, it is dangerous for a car brand to get associated with any faction in society. This can be a way to make a successful niche brand, but not a global leader. If customers feel that driving around with a particular nameplate associates them with a political tribe, it could boost sales in that tribe, but can’t justify being the global leader across all tribes. (Subaru did decently by exploiting a fondness for the Forester in the lesbian community, but left other models alone and did not tie that to the whole brand. Individual models and sub-lines will exploit tribal associations, but the whole company should not.)
It may be those who are saying, “I am re-thinking whether I want a Tesla or not because of Elon’s actions with Twitter” are few in number. Right now, Tesla can sell every car they make — though for the first time they are adding discounts to close out their quarter, suggesting that era may be ending. Generally, you don’t want anybody saying, “I would buy this car, if not for the politics.”
The good news for Musk is that SpaceX, which is still his strongest love, is a private company with a handful of customers (not counting Starlink’s consumer efforts.) His efforts in tunneling and brain-computer interfaces are not likely to be strongly affected for now.