For public figures, camera optics are everything. But for businessmen who must please shareholders, the bottom line is it. Today you produce or perish, even if you are a founder.
Operational problems at Tesla are no secret. The company has had significant problems for a long time. It has burned through 80 percent of the $3.2 billion it raised since March 2017. Its debt more than tripled in just one year to $3.36 billion.
Tesla has little to show for the debt it has incurred. In 2016, the company suggested that it would make between 3,800 to 7,600 Model 3's a week from July to December 2017. How did it do towards its goal? It produced just 5,600 Model 3's in total. In fact, Tesla only manufactured about 2,400 cars in December. Elon Musk had said they could likely reach 20,000 units for the month — a targeted miss of 88 percent. People are starting to question his judgment and leadership.
Musk clearly has to change the paradigm, but instead of creating better, more reliable products, he is attempting to distract investors with stagecraft.
A marketing genius who may be running out of tricks, Musk affixed a Tesla Roadster to the top of a Falcon Heavy rocket that was scheduled to launch into the atmosphere. He put a dummy astronaut, dubbed the "Starman," into the driver's seat, cued David Bowie music, and crossed his fingers that his latest stunt would buy time and hopefully, if successful, new sources of money for his company. The hope was to try and extend the mystery of Elon Musk as a visionary. A successful launch would not only bolster the possibility of government appropriations for SpaceX, but also extend investors' impressions of Tesla as well.
Trouble on the launch pad was disturbing and potentially threatened the successful launch of a SpaceX rocket. SpaceX also has problems of its own, including security violations and annual launch explosions, one of which may have occurred just last month. Musk’s reliability as a forecaster comes into play at SpaceX as well. For example, he inaccurately projected that the Falcon Heavy would get off the ground every year since 2014. An unsuccessful 2018 launch wouldn't have been out of the ordinary, but it could have been devastating if SpaceX couldn’t pull it off.
Musk remained unsure what the Falcon Heavy's fate would be until the very end. His lack of confidence continued right up until judgment day, when he said, "It's either going to be an exciting success or an exciting failure."
As luck would have it, his gamble paid off — temporarily, but was it a true success? This time, SpaceX's launch went smoothly, and the photo ops that came from it were phenomenal. As a result, much of the public and media went crazy over the successful launch. This gave Tesla shares a nice short-term boost in value, but it was not to be sustained.
These elaborate theatrics captivated the public and bolstered Musk’s celebrity status. However, over the long run, the theatrics carried little weight with true investors, who are looking for more than an entertaining sideshow.
Just a day after the Falcon Heavy launch, Tesla's fourth quarter earnings report was released. Musk knew what the numbers would be and the report reminded investors of the company's glaring problems. Tesla reported a $675.4 million loss ($4.01 a share) — its most significant decline ever. In deliveries for its Model 3 yet again, another forecast missed.
While the company went short of downgrading its current production target of 2,500 Model 3 cars a week, a spokesperson said: "It is important to note that while these are the levels we are focused on hitting and we have plans in place to achieve them, our prior experience on the Model 3 ramp has demonstrated the difficulty of accurately forecasting specific production rates at specific points in time." That statement did not exactly emit a ray of optimism about production, and it also questioned the ability of the company leadership to get things right.
On the fourth quarter earnings call, Musk tried to smooth investors' doubts out by leveraging the Falcon Heavy's success, saying, (here comes the misdirection…) “If we can send a [Tesla] Roadster to the asteroid belt, we can probably solve Model 3 production." His remarks weren't enough to convince the investment community, and Tesla's share price lost all the gains it realized after the launch and then some more.
In the end, Musk has to determine what’s more important to him: celebrity or a role as a successful businessman. He needs to realize that gaining the public's approval may be good for his personal ego, but that’s much different to earning investors' favor — and if he is to save himself and his company, he must learn soon that the shareholders are the long-term path to celebrity. Recently, we have seen where other company founders lost their jobs because they could no longer produce. Investors want management that can deliver, and regardless if they are a founder or not, they will have to go if they can’t deliver the goods.
Tesla's chief executive is now under a newly released compensation package, a plan that ensures he won't be paid a dime unless he meets specific deadlines. If he can’t produce he won’t be paid, but the question is will he be forced out for lack of performance?
Flashy shows might excite the public — they may even be enough to convince government appropriators — but they will never impress investors who are risking their own money. The sooner Musk comprehends he is not the greatest showman on earth and needs to become a better CEO, the sooner Tesla will start putting more points on the board.
Dan Perkins is an author of both thrillers and children’s books. He appears on over 1,100 radio stations. Mr. Perkins appears regularly on international TV talk shows, he is current events commentator for seven blogs, and a philanthropist with his foundation for American veterans, Songs and Stories for Soldiers, Inc. More information about him, his writings, and other works are available on his website, DanPerkins.guru. To read more of his reports — Click Here Now.
© 2021 Newsmax. All rights reserved.