Article | The Rise and Fall of Tesla’s Market Value in 2021

After several rounds of plummeting, Tesla’s market value is now hovering around $560 billion, which means that it has evaporated by about 50% compared to its historical high.

Tesla has never been a company with a stable market value. From the privatization scandal in 2018 to its historical peak at the end of last year, Tesla’s market value soared from hundreds of billions to trillions of dollars in just three years. However, enormous declines have also been common, as the production capacity hell of Model 3 and fatal accidents caused by driving-assisted technology and the punishment for improperly announcing privatization have caused Tesla to suffer 5%, 10%, or even 20% crashes year after year, which has become a tradition.

But this time it’s different. The decline that lasted for half a year cut the value by 50%, a scale that is unprecedented even for “crazy” stocks like Tesla, considering its market capitalization of trillion dollars. Remember, when Steve Jobs took medical leave in early 2011 and resigned as CEO in August, the decline of Apple’s stock price never exceeded 10%.

Musk’s two rounds of stock selling are an important factor in Tesla’s slump. This action has an obvious causal relationship with the acquisition of Twitter. Tesla’s market value shifted from turmoil to collapse precisely since the announcement of the acquisition of Twitter in April this year.

Acquisition of Twitter, Sharp Decline

Why did Musk want to acquire Twitter? Since he announced the acquisition of Twitter, Tesla’s market value has been plummeting. He couldn’t be unaware of this reality. To complete the acquisition of Twitter, it is necessary to sell Tesla’s stock to raise cash. The sale of Tesla’s stock will inevitably accompany the continued decline of Tesla’s stock, which he clearly knew.

But he stubbornly went ahead and bought Twitter. After completing the acquisition, a series of actions he took towards Twitter caused him to fall out of favor with Tesla’s basic user base, further worsening Tesla’s already difficult situation.

Musk claims to be an “absolute advocate of free speech,” which means unblocking Trump. After Trump’s reelection campaign failed, he repeatedly tweeted crazy comments on Twitter, causing the violent Capitol Hill event, and his account was permanently banned by Twitter. Since Musk announced that he intended to acquire Twitter, rumors of Trump being unblocked have never stopped circulating.After Musk completed the acquisition of Twitter, the use of the insulting term “nigger” for African Americans increased fivefold on the platform, and similarly, the usage of insulting terms for Jewish people also increased.

Musk’s first action upon taking office was to unban “African American Trump” Kanye West, who had previously made statements such as “slavery is a choice” and “white lives matter,” as well as making death threats against Jewish people on Twitter, which resulted in his suspension from the platform.

Through a series of actions, Musk displayed an image of tolerating and even endorsing racial discrimination and hate speech, which is completely contrary to the mainstream liberal concept of advocating equality. The liberal group, which is precisely the base of Tesla users, is made up of those who live in big cities, have good economic conditions, and advocate equality and environmental protection, which is what has gradually supported Tesla’s sales and reputation in the US.

The acquisition of Twitter and subsequent actions led to a slump in Tesla’s sales. However, this may not have been unexpected for Musk.

Is it a move to change the trajectory?

In House of Cards, facing a series of crises, the incumbent president Underwood came up with a clever move to change the trajectory of events: to declare war on ICO to shift attention.

If Musk hadn’t acquired Twitter and taken subsequent actions, would Tesla be stable now? Not necessarily. Even though the consequences were disastrous, it must be acknowledged that the acquisition of Twitter has covered up a series of scandals involving Musk’s two companies – Tesla and SpaceX – and even himself.

In December of last year, Tesla was exposed for having a “culture of sexual harassment” within the company, which led to several female employees filing a joint lawsuit. At the same time, Ashley Kosak, a former engineer at SpaceX, published an article detailing the company’s sexual harassment behavior.“`

In May of this year, it was reported that Musk had sexually harassed a female flight attendant on a plane, including exposing himself, touching her thigh without permission, and making suggestive remarks such as “I will give you a horse if you do more.”

In June of this year, some SpaceX employees issued a joint statement accusing Musk and some male managers of the company of often “distracting and embarrassing” behavior.

After a series of sexual harassment scandals, “BoycottTesla” became a popular term on Twitter.

It is a well-known fact that in the media-developed United States, the media will contact the company before exposing its scandals, and the public relations team will also intervene during this period, using various means to apply pressure in order to delay or prevent articles from being published, or to advance countermeasures.

Musk’s announcement of the Twitter acquisition occurred in April of this year, followed by articles exposing his personal and SpaceX’s sexual harassment scandals in April and May.

For the past six months, people have been discussing Musk’s acquisition of Twitter and his tolerance of racism and hate speech. These topics have sparked discussions throughout the United States and even globally. The sexual harassment scandals of Musk and his two companies have been overwhelmed. No one can say that everything is so simple, but it is hard not to associate these issues, given the cause and effect and the timing of events.

Remember five years ago when Kalanick was ousted from the board of directors because Uber was exposed for its internal sexual harassment culture?

A Lifesaver

In line with this line of thinking, it now appears that everything is going according to Musk’s plan. Today, the hottest topic in America is Musk’s plan to charge $8 per month for verification of official Twitter accounts (blue check marks). Not only has sexual harassment been obscured but even racial issues have been pushed aside.

“`

Musk’s Personal Reputation is Declining

The charging of fees for certified official accounts has been met with widespread opposition and ridicule, which is unimaginable in the past. After all, most of the owners of these accounts are businesses or celebrities. Charging them 8 yuan per month has caused discussion, but not to the point of ridicule.

More worrisome is that Tesla’s reputation is also declining. AI Day this year was a complete failure. The discussion caused by the release of mass-produced intelligent robots was even less than people’s predictions before the conference began.

Thinking again of Apple, in 2011, the company experienced Jobs’ sick leave, resignation, and death, and the company’s market value increased greatly at the end of that year. The two growth points were the release of the Mac OS X Lion system and the iPhone 4S. That year, when Jobs was lost, the products saved Apple.

Musk may have fantasized that this year’s AI Day could pull him out of the sexual harassment scandal. Look at the timing: On July 8th, he announced that he would no longer acquire Twitter; on September 30th, the AI Day conference was held, and then it sank like a stone in the ocean; three days after the conference ended, on October 3rd, he announced again that he would proceed with the original offer for the acquisition.

Since the delivery of Model Y in 2020 and the generation of Model S/X in 2021, Tesla has not launched any large-scale products for nearly two years. It must be admitted that when individuals and enterprises are winning, criticism and even scandals will be covered up, but when they are at a standstill, scandals will destroy them.

Even if no one can prove causality, the Twitter controversy temporarily covered up the sexual harassment scandal, which is undoubtedly a fact. In the future, Musk’s life-saving straw still depends on Tesla’s generations of outstanding products. The real solution is that he will have to face the mistakes he has made. The sexual harassment cultures in Tesla and SpaceX are unacceptable, and the accusations against him personally will not disappear into thin air.

这世界不是彪哥，做不到 「如果你执迷不悟，我必让你苦海无边」。但性丑闻缠身的肯尼迪终究遇刺了、纵容性骚扰的卡兰尼克终究下台了，马斯克不能赌自己是下一个克林顿。

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.