Elon Musk mouths off again

Tesla boss Elon Musk recently tweeted that the electric-car maker’s share price was “too high”. It promptly fell.

Elon Musk © BRENDAN SMIALOWSKI/AFP via Getty Images
© Getty
(Image credit: Elon Musk © BRENDAN SMIALOWSKI/AFP via Getty Images)

Tesla’s share price, having doubled after the virus-induced market slump, fell by more than 10% following the latest outburst from CEO Elon Musk (pictured). He tweeted that the electric-car maker’s stock price “is too high”, says Richard Waters in the Financial Times. This is ironic given that Musk has been engaged in a “running battle” with short-sellers who have complained “that the shares are artificially inflated”.

Musk’s decision to talk down his own company’s share price is clearly a “kick in the teeth” for investors, says Liam Denning on Bloomberg. However, he is right to stress that Tesla’s stock price is “an emotional, not financial, construct”. After all, the pandemic has piled more stress onto Tesla’s “already less-than-utility-like model”. Despite analysts’ euphoria at the “peanut-sized profits” Tesla announced in its latest earnings report last week, there are serious concerns about what the continuing suspension of activity at Tesla’s main factory in California will mean for future cash flow.

Still, the profit and the recent comeback in the stock price show that Tesla is doing better than its traditional competitors, says Antony Currie on Breakingviews. While the firm’s valuation of 75 times earnings is clearly “unjustified on pretty much any sane metric”, its soaring share price gives it “potential access to far more capital”. And with shares in Tesla’s competitors cratering, it might be a good idea for Musk at least to consider “snapping up” a bigger producer for a “song” and “accelerating his goal of advancing the mass production and adoption of electric vehicles”.

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Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

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