Elon Musk Needs to Change Behavior or Be Replaced

The Wealth Advisor Contributor
March 15, 2024

To address Tesla's significant stock downturn, seasoned investor Ross Gerber articulated to Yahoo Finance that Elon Musk must either modify his conduct or step aside as CEO. Gerber posited, "A swift reversal is possible if Tesla appoints a genuine CEO who can genuinely aid the company, or if Elon adjusts his approach and dedicates himself to Tesla and its positive brand promotion."

Tesla's shares have plummeted over 36% since the start of the year, amid underwhelming earnings, an uninspiring product range, and adverse market conditions. Wells Fargo recently lowered its target price for Tesla to $125 per share, which would signify a 23% decrease from its current price, labeling Tesla as a "growth company experiencing no growth." The bank also forecasts that Tesla's earnings per share will fall 32% short of this year's expectations.

Investors like Gerber are increasingly disillusioned with Musk's leadership and public antics, particularly after his acquisition of X, previously known as Twitter. While Musk's tweets once served as an effective, cost-saving marketing tool for Tesla, his recent online behavior has sparked controversy and adversely impacted the company, as Gerber frequently noted.

Gerber's decision to switch his Tesla Model Y for a Rivian vehicle, following Musk's engagement with an anti-Semitic post last November, underscores a significant shift in sentiment from an investor who once aspired to join Tesla's board. He expressed to Yahoo, "Investors are reaching their limit, realizing the flaws in a business model where the figure who once championed the brand has now become its detractor."

Adding to concerns, Musk's venture into artificial intelligence projects outside of Tesla could divert resources and focus from bolstering Tesla's technological edge.

However, Tesla aficionado Dan Ives of Wedbush Securities views the market's pessimism as exaggerated, suggesting Tesla's stock could recover by 77% within a year. For this to happen, Ives advocates for a revision of Musk's compensation and an increase in his share ownership.

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