Investors Call for Elon Musk’s Undivided Attention to Propel Tesla’s Success
Tesla’s $500 billion rally this year is drawing skepticism as rivals seize opportunities in the booming electric vehicle market. Respondents to the latest Markets Live Pulse survey highlight the heightened risk of industry competition and express concerns about CEO Elon Musk’s behavior and decisions.
With Elon Musk’s attention divided between various ventures, including social media, space travel, and artificial intelligence, 26 percent of respondents consider this a key concern for Tesla shareholders. Matthew Tuttle, CEO of Tuttle Capital Management, describes Musk’s unpredictability as one of the top risks for the company.
While Tesla currently leads other automakers in the electric vehicle space, maintaining this dominance is crucial to its high market valuation. However, competitors like China’s BYD are gaining ground rapidly. BYD delivered 352,163 fully electric vehicles in the second quarter, close to Tesla’s all-time high of 466,140.
Although some Tesla rivals face teething issues, government policies promoting EV adoption could change the landscape. As such, analysts and investors caution that Tesla’s advantage may diminish quickly. The company’s shares, trading at 75 times forward earnings, are considered expensive compared to GM’s six times and Ford’s nine times estimated profits.
Tesla’s defense of market share may come at the cost of profit margins, with 63 percent of respondents expecting the company to lower prices to capture higher volumes. This strategy has already impacted Tesla’s profit margins, and further cuts could narrow the gap with other auto companies.
The impact of recent price cuts on Tesla’s profits will be evident in the second-quarter results, with the average profit estimate down 29 percent from six months ago.
Musk’s risky ventures have also concerned shareholders, as seen with his bid for Twitter last year and the subsequent selling of Tesla stock to finance the acquisition. Twitter’s declining value has added to these concerns, with most respondents doubting it will ever be worth as much as Musk paid for it.
As the competition intensifies and investors keep a close eye on Musk’s actions, Tesla’s future growth and market dominance remain key factors for its continued success in the rapidly evolving electric vehicle industry.