Given all of his extracurricular activities, it can be easy to forget that Elon Musk is also concerned with the business of selling electric vehicles. His company, Tesla, is really the wellspring of everything else in Muskland. Its success, and ensuing sky-high stock price, is principally how he rose to be the world’s wealthiest person, which affords him the ability to, say, buy a social-media company and then spend millions of dollars in legal fees in a ruse to not buy it as an unsuccessful negotiation tactic (probably — he still has until October 28 to close to the deal). Should Musk lose his golden touch in selling his cars — and the reality is that he is very good at making and selling them — that would have a serious negative impact on the rest of the stuff that makes Musk so interesting: the robot, the perfume, the tunneling sidelight, and so on and on.
Tesla offered up its latest answer to how things are going there on Wednesday, announcing quarterly earnings against the very high expectations that Wall Street has set for Musk’s ability to make money and deliver cars. The final report card is something like a C or C+, depending on how strict of a grader you want to be. The company may have brought in more money than it ever has before, $21.5 billion in revenue, but it was not enough to satisfy the analysts who set the expectations for how the numbers in the earnings report should look. (In this case, Musk missed the revenue mark by nearly half a billion dollars). The numbers also suggest Musk will not make good on his promise to deliver 1.4 million cars by the end of the year. The company did say that it would start delivering its electric trucks this December, but that didn’t offset various causes for concern.
Prior to the earnings announcement, Musk took to his Twitter account to make a nonspecific message of support to his followers that, to me at least, sounds like him saying, Please, please, please don’t sell my stock. I’m going to do better next time, I promise.
On the earnings call, Musk seemed to alternate between disengagement and hyperbole. He admitted that he and other investors have “overpaid” for Twitter, which is about as good a sign as we’ve seen that he’s not planning on crashing this deal again. (After saying that, the after-hours price of Twitter shares jumped to $54.21, above the price that Musk agreed to pay in April, the first time that’s happened since he made the offer.) At one point, he chastised investors for thinking too short-term and demanding buybacks even though he is very likely going to have to sell shares of his company to fund his purchase of a social-media company. He stuck to his favorite theme: his vision of the perfect future, where he is even more unfathomably wealthy. “For the first time, I see a way for Tesla to be, let’s say, roughly twice the value of Saudi Aramco,” he said, referring to the $2 trillion oil company. (Weirdly, for a projection of that magnitude, it felt a little bit like an off-the-cuff comment.) Later in the call, he seemed to even indicate that it could be worth more because of sales of the robot that Tesla recently debuted. “I mean, this is the first time I’m seeing that potential,” he added.
After the company’s earnings came out, the stock fell to around the lowest level it’s been all year — roughly the same price it was in June 2021. This matters because Musk still has to pay for Twitter and Tesla shares are how he’ll do it. Musk can sell stocks, and he has done so in the past. He’s also sitting on roughly $20 billion in cash from previous sales. Even if Musk can keep his co-investors onboard — and that’s an open question — there’s still another $3 billion or so that he would have to find. But he’s the richest man in the world. He’ll find it. The Twitter deal is clearly not in danger of falling through anymore. Whether it can live up to the same insane expectations as the rest of his companies is another question.
Correction: This story was updated to include the correct market capitalization of Saudi Aramco, which is about $2 trillion.
