According to news on January 29, six years ago, Tesla formulated a bold compensation package for CEO Elon Musk (Elon Musk), making him the world’s richest man and winning widespread support from investors. Now, however, Musk's desire for more control has raised questions among investors.
Ross Gerber, a long-time Tesla investor and loyal ally, put it bluntly in an interview: "He wants the stock, and the whole thing is ridiculous." Gerber admitted that he began investing in Tesla ten years ago and has gone through many stages of development with the company, but now he believes the story is nearing its end.
Although Gerber has not fully divested from Tesla, he has lowered his expectations for the company's future and has been publicly critical of Musk. It epitomizes growing investor disillusionment with the talented but erratic entrepreneur. Since Musk requested a 25% stake in Tesla this month to prevent "takeover by questionable interest groups," investors' patience appears to be running out as the risks involved in his personal decisions and financial operations have jeopardized their wealth.
In November last year, after Musk liked an anti-Semitic remark on Twitter, a large number of Tesla investors contacted Gerber, hoping to withdraw their investment. This was a critical moment for Gerber's change in attitude towards Tesla.
More than a year ago, Musk sold billions of dollars worth of Tesla stock in an effort to raise $44 billion to acquire Twitter. After taking over the social media platform, he quickly laid off a large number of employees and even changed the iconic blue bird image and renamed it "X". Not long ago, advertisers began boycotting the platform after Musk chose to support anti-Semitic rhetoric.
During this controversy, Musk actively lobbied Tesla shareholders to restore his shares in the company, claiming that his current 13% stake may cause him to lose influence and even face the "risk of being voted out." This makes him less willing to further increase investment in Tesla's artificial intelligence projects. It is worth noting that Musk’s business empire also includes an artificial intelligence company called xAI.
At the same time, Tesla's latest financial report showed that although price cuts have brought about growth in sales, it has also caused its revenue to stagnate. On top of that, the company predicts that growth could "decline significantly" in 2024. The day after the financial report was released, Tesla's stock price plummeted 12%, and its market value evaporated by more than 80 billion US dollars.
Wedbush Securities analyst Dan Ives has praised Tesla and Musk in the past. However, commenting on the earnings call, he said: "This is a disaster." He added: "I understand why Musk is seeking more control, but conceptually, this is completely playing with fire." After the earnings report triggered market turmoil, Ives called the incident a "train wreck" and pointed out that timing was the key to the problem.
Meanwhile, Nell Minow, Vice Chairman of Value Edge Advisors and a Tesla investor, last week issued a report to clients, including large investors, questioning Musk's request to increase his stake in Tesla. Although Musk has not actually acquired more shares, Minow pointed out in the report that this may pose a potential threat to Tesla's future development and shareholder interests.
"Musk's threat to demand more control is like him smashing a brick through your candy store window, it's an act of extortion," Minow said in an interview. "He's threatening to take something from the company that already belongs to the shareholders. He can't do that any more than he can say, 'I'm going to take all the computers home.'"
Gene Munster, managing partner of Deepwater Asset Management, also expressed concerns about Musk seeking more control. He pointed out that this concern is still reasonable, "Musk has weakened his voting power by selling shares, but he still regards Tesla as his child and wants to firmly maintain control."
Since Musk does not receive a regular salary at Tesla, his net worth mainly comes from stock holdings and rising stock prices. Musk's current net worth is approximately $199 billion, according to estimates from the Bloomberg Billionaires Index. However, with stock sales coming under pressure from a high annual tax bill, investors are worried he may have to sell further Tesla holdings to pay the bill.
The rift between Musk and Gerber, the leader of Kawasaki Wealth & Investment Management, a long-time supporter, is particularly striking. A longtime Musk ally, Gerber has crossed paths with the entrepreneur since their days at the University of Pennsylvania. However, as Musk put more effort into the Twitter acquisition, Gerber began to feel dissatisfied.
Gerber said he became increasingly concerned as Musk began acquiring Twitter. It was an extremely complex deal, and ultimately Musk was forced to honor a $44 billion bid that many considered too high. "Musk offered a premium for a company that was in trouble," Gerber said. "It was a very good deal for the company, and there was no due diligence requirement and the board had to accept the deal."
However, the real breakdown in the relationship between Gerber and Musk occurred in November last year. At the time, Berg’s phone was ringing off the hook as investors in his fund were clamoring to divest from Tesla.
As time goes by, more and more investors have expressed doubts about Musk's leadership style and decision-making, making Tesla's future development prospects full of uncertainty. In the story of this tech giant, Musk's personal decisions and financial maneuvers had a profound impact on the company's future.
As Gerber looked at Musk's activity on X, he came to understand why investors were beginning to have doubts about the tech mogul. Musk went so far as to tweet a conspiracy theory to his billions of followers, absurdly claiming that the Jewish community was promoting "hatred of white people." While investors have expressed tolerance for many of Musk's actions, they could not tolerate such blatantly anti-Semitic remarks.
Gerber has repeatedly defended Musk on national television, but now he's outspoken that Musk needs to face reality. He publicly accused the entrepreneur of causing huge risks to Tesla.
Gerber wrote on Twitter: "It takes a lifetime to build a reputation, and it only takes a day to destroy it." He lamented: "Musk has completely failed to bear his due responsibility! The 'carnival' of Tesla investors seems to be coming to an end."
In response, Musk chose to block Gerber from the platform. For a person who claims to support free speech, this behavior is undoubtedly full of irony. According to Gerber, this was "retaliatory in nature."
As Musk's anti-Semitic comments triggered serious fallout, Gerber expressed his displeasure to X CEO Linda Yaccarino and suggested that the company cooperate with the Anti-Defamation League. The Anti-Defamation League, an activist group dedicated to combating hate speech and violence, had previously met with Musk and requested content moderation.
Yacarino responded privately to Gerber: "I agree with the Anti-Defamation League. We are in contact with them every week and have a great relationship. We have reached out to them and plan to work more closely with them in the future."
Yacarino's praise of the Anti-Defamation League came as a surprise, as it was not long ago that Musk threatened to file a defamation lawsuit against the organization. At the time, the organization accused X of anti-Semitic tendencies, and in fact, during their exchange, Musk even said that the Anti-Defamation League should be renamed the "Defamation League."
While dealing with personal matters, Yaccarino updated Gerber on her efforts to address the issue of being imitated on X, but she did not respond to another of Gerber's requests.
Gerber wrote: "Can you ask Musk to stop blocking me? I am an investor in X and I stand by Musk every time he is in trouble. I want to help him avoid further trouble."