Elon Musk in Beeple’s Digital Artwork.
Part 1: The Cult of the TechnoKing, Elon Musk.
Stimulus spending is at all time highs. Interest rates are at record lows. The stock market is at an all time peak.
And yet… we are in still in the midst of a Global Pandemic.
We are in bubble territory.
Of all the companies that appear as a warning sign to this impending doom, the electric automobile company Tesla leads the pack. Over the course of 2020, Tesla’s share price has risen nearly 1000%. It is currently trading at a Price to Earnings ratio of over a 1000. For every dollar of net income generated by Tesla, shareholders are paying a 1000 dollars.
As a comparison, Toyota, is trading at a Price to Earnings ratio of 15. Even technology companies like Apple and Facebook are trading at a P/E of 30.
Tesla’s share price over the past decade.
Confused?
There have been many hypotheses to explain this absurdity. One of the most prominent is the almost cult-like following that surrounds Tesla’s maverick founder, Elon Musk. A following that is driving up the companies share price far beyond fundamentally sound levels.
From the beginning of the 21st century, younger generations have slowly and increasingly learned to distrust faceless organisations. In the internet age, the peeling back of the facades of large companies, institutions and governments has eroded our trust in these centralised authorities.
If we trust now, we place it in people. Transparent, open and flawed as you and I.
Today, personal brands often carry far more weight than fundamentals & financials. Musk has endeared himself to the younger generations, leveraging social media and demonstrating an unwavering finger on the pulse popular culture.
Can you imagine the great Jack Welch of General Electric smoking cannabis on the most famous podcast in the world, causing his company stock to tumble 10% the following day.
How would your react be if Bob Iger of Disney came out publicly and bestowed his newborn son with the name ‘X AE A-XII’.
Lastly, can you imagine even Steve Jobs selling flamethrowers to the general public, claiming that they would be most useful in the event of the zombie apocalypse?
To an earlier generation, It would seem absurd and inappropriate.
But we love it. The Twitter-verse Loves it too.
Musk isn’t trying to sell Tesla’s to people that are stuck in the past. He is trying to sell Tesla’s to individuals that want to be part of new and better future. The personal brand that he has built is appropriate for the vision that he is trying to sell.
The vision from making humans beings an interplanetary species with Space X, and the goal of combating climate change by leading the transition to electric vehicles with Tesla are theme of the realms of Science Fiction. They have such grandeur, and require a maverick leader behind them.
When you think of Tesla, you think of Elon Musk. You think of an undeniable yet peculiar genius that sets seemingly unattainable goals and still finds a way to achieve them.
You think of an individual who was received a payout of $100 million with the sale of PayPal in 2002 at 30 years of age, and then put half of it into founding a Rocket Company and half of it into founding an Electric Car company. For each of these endeavours, Musk himself had said that there was only a 5–10% possibility of success.
If he was motivated by money, he could have simply lived of his PayPal equity sale for the rest of his life. Instead he invested 100% of the money he was rewarded into his vision, simply because he believed that addressing climate change and making human beings colonise Mars were important for the future of Human Civilisation.
Musk was motivated to achieve these goals for the benefit of us all. His reasoning was that if he didn’t take on the challenge, no-one else would.
For a generation of individuals that have brought up with the constant reminder of the threat and impending doom of climate change, Tesla’s Mission Statement seems like a rallying call. Its a real mission that each of us can stand behind;
‘To create the most compelling car company of the 21st century by driving the world’s transition to Electric Vehicles.’
Lets contrast it with Ford Motor’s;
“to make people’s lives better by making mobility accessible and affordable.”
Which one excites you more?
An investment into Tesla is not a bet on underlying profitability or price.
To me, it doesn’t even matter if Tesla goes to Zero.
I would rather allocate what resources I have to one of the few individuals who I believe is attempting to achieve important things, for the benefit of us all.
It is an investment into a brighter future.
