So:I know “fundamentals don’t matter” anymore with $TSLA, but still find it remarkable that the consensus 2025 estimate for Adjusted EPS($3.05) has completely round-tripped to where it was in 2019, before the stock went parabolic. pic.twitter.com/XtNu0twMxC
— James Chanos (@RealJimChanos) January 31, 2025
Tesla is a rare sort of company in that it’s both a large automaker that sells a lot of cars and a sort of meme stock that attracts investors based, at least up until recently, on faith — or faith in the faith of others — in Musk’s ability to manifest more than electric car sales: fully autonomous vehicles, humanoid robots, cars that will make you money while you sleep, etc. This is effective for as long as you can sustain it, either by actually making things happen or by coming up with even bigger and more persuasive promises about the future, and Musk mostly has. Recently, as CNBC puts it, this has taken the form of a familiar pivot: “Musk has been telling investors in recent quarters to focus less on the core business as it exists today and more on a future of autonomy and robotics.”
There are good reasons to assume that, in the near term at least, the gap between Tesla the company and Tesla the Elon Musk Memecoin might widen even further, including a seemingly reputation-based sales drop in Europe and especially Germany and the U.K., which are relatively small markets for the company, but also in California, which is a major market for the company and was one of its first. Then there’s what happened right after the election: a massive rally in which investors pushed Tesla’s stock price up by 50 percent despite a muted market response to the company’s October Cybercab event, merging investors’ bets on Musk with the broad and at least corruption-curious Trump trade.
You could argue that Tesla has been “bailed out” by its faithful retail investors, who basically conceptualize Musk as someone who usually gets what he wants, on multiple occasions. Aligning himself with a government — or literally becoming part of it and party to reshaping it — frames its future, and his, in different terms. Musk is used to asking people to imagine futures in which cars drive themselves, robots clean your house, and Mars colonization is just around the corner. Should he manage to embed himself in the federal government, his next big pitch to investors wouldn’t be so specific, and he’d hardly even have to make it: Imagine a world in which I can’t lose. It’s a dark promise that some will surely find intoxicating (at the moment, the market seems to be somewhere between unconvinced and worried). Maybe it’s a historic smash-and-grab and he finds an off-ramp, somehow, or DOGE’s various interventions amount to less than Musk wants them to appear currently.
Or maybe it’s closer to a characteristic all-or-nothing bet: Either he substantially alters the functions of American government in ways that are both ideologically driven and nakedly self-interested, fortifying his wealth and power in strange new ways that call into question the entire American project, to the horror of many of its citizens but with the support of at least some, or he ends up being the guy who tried to do that — who, in his reported words, took his “shot” with “the best hand of cards we’re ever going to have” — and failed.Musk is an adolescent who sees the world in adolescent terms. The terms of a comic book, where supervillains try to take over the world (as if the world were so unitary) and yet can’t be arrested because their aim (taking over the world) is not a crime (an actual Fantastic Four storyline I still remember from 60 years ago), or because the villain has diplomatic immunity (yup, same story). Everything is reduced, in other words, to bright colors, simplistic concepts, and fists.
Musk clearly cares a lot about X — he trapped himself into buying it and merged it completely with his public persona — but, as a business, it’s not exactly thriving. Growth is flat at best, and that’s if you trust the private company’s vague statements over virtually every other indicator. (“Our user growth is stagnant, revenue is unimpressive, and we’re barely breaking even,” Musk reportedly wrote in an internal email seen by credible journalists, before denying without explanation that he sent any such thing.) Advertising has collapsed. Populations of users have gone quiet, while bots and spammers have spoken up. There’s still a lot happening there, but it’s a diminished platform; by the standards most owners would care about, at least, things are not going well. X’s owner has insisted that this is just a painful process of needed transformation and has mused in similar terms about what he’d like to do to the federal government, deep cutting of which “necessarily involves some temporary hardship,” as he said before the election, “but it will ensure long-term prosperity.”You’ll need that for context. The point is this:
Last August, The Wall Street Journal reported that the $13 billion borrowed for Musk’s acquisition was “the worst merger-finance deal for banks since the 2008-09 financial crisis.” In late January, The Journal reported that banks are hoping to offload $3 billion of senior loans — the safest ones, in other words — at “90-95 cents on the dollar,” which obviously isn’t ideal but could be a lot worse. “Musk’s recent rise in power and alliance with President Trump,” The Journal suggests, “have seemed to help change the narrative around X’s fortunes.”
A) All that blather about "business is better!" anti-government Reagan era/Friedmanesque (Milton, children, not Tom) bullshit is exposed by the very fact people invest foolishly and follow the sunk cost fallacy of "in for a penny, in for a pound." People keep investing in Musk because they keep expecting it to pay off when, as seen by the condition of Twitter (lost 80% of its value under Musk) he can't do anything but run businesses into the ground.
Sound familiar?
And yet banks and investors keep giving him money.
Sound familiar?
If any ordinary person operated at that level of confabulation and foofaraw, we'd call him a "con man" and kick him back to the gutter, broke and penniless. But F. Scott was right: the rich ARE different. They're too big to fail. Until they do. And then they aren't rich anymore, so who cares, right?
Governments operate differently because they have to. Their money is the public's money, and government is responsible for handling it. Yes, there was waste in the Pentagon in the '70's and '80's (and probably still today), but the response wasn't to shut down the Pentagon (and no, neither Trump nor Elmo have the authority to shut down government agencies. That's those pesky federal courts interfering with the Administration again! As they should be....) Musk and Trump don't understand that, because Musk and Trump are twin sons of different mothers.
Despite the media hype painting Musk as a genius and inventor, he largely built his financial empire on other people's research. At every turn, he's relied heavily on technologies developed because of the very federal largess he now deems a "ripoff." He'll never admit it, but Musk owes former Vice President Al Gore a giant thank you. Gore did not claim, as conservatives pretend he did, to "invent" the internet. But Gore was telling the truth when he said, "During my service in the United States Congress I took the initiative in creating the Internet." He spent the better part of two decades promoting the internet, backing legislation to fund its development, and organizing research agencies to make it happen. As early pioneers in the internet's development, Vint Cerf and Bob Kahn, explained in 2000, "Al Gore was the first political leader to recognize the importance of the Internet and to promote and support its development" and "no other elected official, to our knowledge, has made a greater contribution over a longer period of time."
Musk got rich because of all this work. In the 90s, he built a website called Zip2 that functioned as an online Yellow Pages. He sold it to Compaq in 1999, netting $22 million. He made another huge chunk of money as the CEO of PayPal, which would also not exist but for the decades of government-funded development of the internet. Musk deserves credit for developing coding skills at a time when the internet was still new, of course. But he also just got really lucky in being a young man right when decades of taxpayer-funded research into the internet was finally paying off.
That's been the story of Musk's career ever since. Without investment from the Department of Energy into developing batteries and other electric car technology, there would be no Tesla. Car companies were often reluctant to fund that research because it would take decades to pay off. Only the government, which works for the people and not for profits, has a motive to put money into scientific inquiry on that time scale. SpaceX scientists have done impressive work, even if they probably won't get us to Mars, despite Musk's ignorant bleatings. Still, as admirable as the people who work for Musk may be, they wouldn't be able to do any of this without NASA and the federal government's astronomical 20th-century investment in the space race. It is the same story with Starlink, which exists because of satellite technology initially developed by both the American and Soviet governments. At every turn, Musk makes money only because he grabs onto technologies that were invented at taxpayer expense.
And that's just the science side of it. In every way, Musk's fortune has depended on federal largess. Tesla was injected with a generous loan from the Department of Energy at a critical time. Without federal tax credits for electric vehicles, Tesla would likely not have enough customers to survive. Economists also point out that Tesla was kept afloat by regulatory credits made possible by the government. Now, of course, Musk rakes in large amounts of cash as a government contractor, all with businesses he built on a foundation of government-funded research.
Musk's ingratitude is breathtaking. It also fits the larger pattern of tech billionaires spitting venom at the middle-class workers who did the real labor in creating the products these capitalists profit so handsomely from. The psychology at play is not especially mysterious. Knowing that other people actually did the work and you're just taking the credit has got to be unsettling. Musk in particular has a long, documented obsession with pretending to be smarter and more accomplished than he actually is, even in areas as inconsequential as video gaming. (He hires people to play online games for him, and passes off their scores as his own.) Musk isn't a scientist, he just plays one for TV. I have little doubt that he resents real scientists, as poseurs always do when confronted with the real thing. He's probably taking his insecurities out on people whose only crime is being what he only pretends to be. Unfortunately, his petty psychodrama will have real impacts on the whole human race, which may be denied the often life-saving benefits of what real researchers do.
I understand PayPal kicked Musk out before he ran it completely into the ground. Twitter is not a one-off. I also understand Musk doesn't really have any coding skills. That's another myth/media hype bit of fog that follows him around and keeps him hidden from clear view.
As for SpaceX, despite the fact they stand on the shoulders of giants, giants who actually built a "heavy lift vehicle" that took a three man crew and a LM and, later, a rover, to the moon successive times, SpaceX can't build on that doesn't blow up in the atmosphere.
I do love the outline of how much government funding means to Trump's fortunes. But Musk, like most tech bros who think they run the world (like comic book villains; all they need is a mustache to twirl), he can't figure out why he isn't in charge.
Musk isn't a scientist; he's not even a computer coder. Bill Gates actually bought DOS from the guy who invented it. Gates' "genius" was in marketing, a la Steve Jobs. Wozniak was the computer genius (and Gates and Jobs did do brilliantly through marketing). But Gates hitched his wagon initially to IBM. IBM's ultimate problem was, Gates' program ran on anybody's computer, and better designers and engineers ran circles around IBM. Musk is getting squashed (as predicted) by "legacy" manufacturers, but the greatest problem with electric cars now is that consumers are waiting for Toyota's "long distance" battery, the one they don't have to stop and recharge every few miles, or worry about running out of power if they drive around town all day (the grotesque inconvenience of recharging a car battery for hours when it gets low, v. a comparatively fast fill up at a gas station, still boggles my mind. I'm sure the electric car gets around town well enough, but you have to be sure you can return to home base, don't you? And long-distance? You're probably better off with a really long extension cord.)
There's also the problem that no one wants to drive a car associated with a Nazi. Well, not enough people, anyway.
My point being, Musk is done, he just hasn't gotten the message yet. He's reached his apex and his nadir, all in the same moment. Sure, he has all the media attention. But he's not Trump (and Trump is already wearing out his welcome, for the last time). This media attention is wrecking his companies. And he's got nowhere to go but down.
He's not a Rockefeller or a Vanderbilt, content to live in quiet seclusion a life of grandeur, giving enough money to charity to make it look like he's not a greedy asshole. He's not Andrew Carnegie, conscious of any moral debt to society whatsoever. He doesn't have a public relations advisor telling him to go on the street and hand out pennies to the urchins, in order to look kindly and benevolent when he's really not. He's not even Joe Kennedy, looking to sire a generation of politicians to clean up the sordid history of how he got his money. So where does he go, but down? He's Tailgunner Joe, addicted to the spotlight until the spotlight melts him into a puddle.
He's a terrible businessman; ask the people who kicked him out of PayPal. Ask the investors in Twitter. It's very likely the opacity of his DOGE bros is so he can make his actions looks worse (and so more consequential) than they are. The courts are eventually going to come after him personally, especially if he keeps acting like their orders don't apply to him at all. It may be hard to hold the government in contempt; holding Elmo, who after all is NOT a government employee, in contempt, is quite a bit easier. And there's always the matter of all those companies he owns/works for, and all those shareholders who may come (soon!) to resent the CEO getting the company they own, into so much financial trouble. All because he's a Nazi.
Nah, they don't care that he's a Nazi. But follow the money down the drain, and the legal consequences of pissing off the entire federal judiciay, and then see that the shareholders actually care about. Yeah, that could happen....
N.B.
Elon Musk is running the country into the ground with his fake job just like he's doing in his real job. pic.twitter.com/eUa6u3Auqe
— Art Candee 🍿🥤 (@ArtCandee) February 11, 2025
The question that keeps occurring to me is "Will anyone enforce the court decrees?" Will the FBI? The US Marshals? Who will go in and drag him out (and I mean that literally)?Much more likely to be civil than criminal contempt. But if Musk ignores it, even by doing it again, it’s “Tesla is owned by a Nazi,” only with broader and stronger repercussions.
The question that keeps occurring to me is "Will anyone enforce the court decrees?" Will the FBI? The US Marshals? Who will go in and drag him out (and I mean that literally)?
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