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.

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”.

Recommended

US stockmarkets shrug off the mob's rampage through the US Capitol building
US stockmarkets

US stockmarkets shrug off the mob's rampage through the US Capitol building

US stockmarkets seem more interested in the results of Senate elections in Georgia than on the lawless mob's raid on the country's Capitol building.
14 Jan 2021
When will the US stockmarket bubble burst?
US stockmarkets

When will the US stockmarket bubble burst?

With US stocks more expensive than before the Wall Street crash of 1929, there are growing signs of “mania”. But what will push markets over the edge?
22 Jan 2021
The MoneyWeek Podcast: let's talk about bubbles
Stockmarkets

The MoneyWeek Podcast: let's talk about bubbles

Merryn and John talk about the many obvious signs of a bubble in certain assets, including tech stocks, TikTok, and stock-trading 12-year olds. It's c…
22 Jan 2021
Eternal growth: how to invest in the future of the drinks industry
Share tips

Eternal growth: how to invest in the future of the drinks industry

Humans have been dabbling in tasty beverages for millennia. Jonathan Compton assesses the key trends in the sector and recommends seven hard- and soft…
22 Jan 2021

Most Popular

Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
Inflation is the easiest way out of this – just don’t expect politicians to admit it
Inflation

Inflation is the easiest way out of this – just don’t expect politicians to admit it

The UK government borrowed £34.1bn in December, a record amount for that month. Britain's debt pile now amounts to 100% of GDP. How are we going to pa…
22 Jan 2021
The world’s fund managers are getting very bullish – be careful out there
Stockmarkets

The world’s fund managers are getting very bullish – be careful out there

The latest survey of fund managers shows them to be extremely bullish on all the same things. And that, says John Stepek, means the market is in dange…
21 Jan 2021