analysis
Tesla boss Elon Musk's 'train wreck' performance rattles the faithful
The erratic behaviour of Tesla boss Elon Musk has legions of investors concerned. (Reuters: Gonzalo Fuentes)
Elon Musk has always been a trailblazer.
Long before he helped spark a revolution in the future of automobiles, he foresaw the need for payment security in a digital world and earned his first fortune as a co-founder of PayPal.
Along the way, he has explored the outer reaches of space, controversially taken control of one of the world's biggest social media sites and experimented with the idea of, not just Artificial Intelligence (AI), but linking human brains to computers.
Right now, however, legions of investors are concerned about Musk's increasingly erratic behaviour while his competitors are fearful they may end up following the path he is treading.
Much of the concern is focused on Musk's main business, Tesla. And for many, there is a niggling worry that the shift in attitude towards the South African-born tycoon may spread further afield and shake the financial foundations of a technology boom that has driven Wall Street back to record levels.
It's been a volatile ride for US technology. During the pandemic, as interest rates plumbed zero, central banks frantically printed money, encouraging cashed-up investors to abandon any concept of risk.
Tech stocks headed for the stratosphere and took Wall Street and global investors with them.
That boom came to a shuddering halt in 2022 as rate hikes were deployed to kill off an inflationary spike.
But then came ChatGPT. Suddenly, the world was agog with equal parts wonderment and fear about the future of AI. Tech stocks again headed for the stars in a tech boom Mach II that so far shows little sign of ending.
Tesla led the charge for electric vehicles, but has always been considered a technology company. (AP: David Zalubowski, File)
Car company? Or a vision of the future?
As the world's richest individual, Musk can afford to lose the odd billion here or there.
On Thursday night, New York time, his individual net worth dropped a cool $US18 billion in just a couple of hours after releasing Tesla's latest earnings. Tesla shares plunged almost 13 per cent as the erratic boss delivered what some analysts called a "train wreck of a conference call".
The crux of the issue is the way Tesla has been valued. And it's a salient point for many other technology hopefuls.
Believe it or not, but for years, Tesla has been valued by Wall Street as bigger than General Motors, Ford, Fiat Chrysler, Volkswagen and Toyota combined. That's despite selling only a fraction of the number of cars its competitors produced.
The reason? It was seen as a window to the future; that it would prosper as old-style petrol-fuelled internal combustion engines became obsolete.
Last week, however, Musk unveiled a set of numbers that appeared to show the wheels falling off the well-hyped machine. Tesla's margins were being squeezed after it last year repeatedly cut the price of its electric vehicles across multiple markets.
It's also having trouble sourcing material as a result of shipping constraints in the Red Sea, forcing it to temporarily shut production at a European facility.
Some of Tesla's factories have had to stop production as a result of supply chain issues. (Reuters: Aly Song)
But the bigger problem is competition. While the big American automakers have yet to successfully make the jump to electric vehicles, Chinese manufacturers certainly have while European manufacturers are rapidly tooling up for an all-electric world.
Suddenly, Tesla is being seen as an automobile maker and not a technology player. Its once-huge margins are shrinking and investors are becoming tired of the tall tales and inflated forecasts from its charismatic leader.
Thumbs and pies
There's a well-thumbed playbook many entrepreneurs swear by.
Always keep the punters on their toes. Continue buying new businesses and sidelines that may or may not end up being bigger than your main game. Constant expansion and acquisitions never allow anyone to monitor performance.
Last Friday, Musk seemed to be heading in a multitude of directions, all at once.
He wanted to nearly double his voting control of Tesla to 25 per cent, a touch more than it was before he sold down to fund his overvalued purchase of Twitter. The desire came with a thinly veiled threat. If he couldn't gain more influence, he'd prefer to develop new technology outside of Tesla.
Tesla began delivering its newest electric vehicle, the Cybertruck, late last year. (Reuters: Mike Blake)
He has plenty of corporate vehicles with which to pursue this.
Last week, there were reports his new technology start-up xAI raised $US500 million as part of a $US1 billion funding package, which later were denied by Musk. Within days, there were further reports he was looking to raise $US6 billion which, if successful, would boost the company's valuation to $US20 billion.
AI has dominated investment markets since OpenAI let loose its ChatGPT technology last year.
Musk is no stranger to the field. In fact, he was instrumental in OpenAI's formation before being dumped as a director. His new venture, with its own AI called Grok, is aimed at taking the company head-on.
And then there's Neuralink, a firm pioneering technology to implant chips in the human brain and then link them to computers, which could be used to treat disabilities, blindness and paralysis.
X marks the spot
He may be one of the world's best-known individuals but he certainly isn't amongst the most liked.
Musk has had a series of run-ins and bust-ups with many of his closest associates.
And for some reason, he is obsessed with the letter X. For anyone familiar with Twitter, the $US44 billion social media outlet that Musk bought for reasons that were as much personal as business, the rebranding to X was perplexing and, most would argue, entirely unnecessary.
Elon Musk has had an affinity with the letter X long before he purchased Twitter and rebranded it. (Reuters: Dado Ruvic)
Almost a quarter of a century ago, Musk fell out with his PayPal contemporaries over an attempt to rebrand the financial services outfit, X.com, which numerous testing groups believed sounded like a pornography site.
Early in the piece, his partner – whose PayPal system was superior to Musk's X.com money transfer system – resigned over Musk's insistence that the operation use a Microsoft platform, leaving the then-follicly challenged South African as sole chief executive.
But not for long. When he took his first vacation in years, the board moved against him, ousting him in a coup that resonated through the rest of his career.
"That's the problem with vacations," he told Fortune in 2007.
Since then there has been SpaceX and now xAI.
Although stretched in all directions, Musk has been able to hold the empire together.
But if Tesla ends up being valued as just another car manufacturer, rather than a futuristic technology play, the wily entrepreneur may one day find himself as XCEO.