Elon Musk Gets the Last Laugh

Tesla is a very interesting company when you really think about it. I mean, here's this guy who is the face of the company, Elon Musk, who was not even technically a founder of the company.

Sure, he's listed as one. But he fought, through a legal battle, to get his name on the list. The reality is that the company was founded by two innovative men with a new and fresh idea, Martin Eberhard and Marc Tarpenning in 2003.

Elon Musk came in, in 2004 as an investor, posting $6.5 million to Tesla's coffers. He ultimately would take over the company.

The company is most certainly transformative, and while hard to believe, saw it's market cap before its stock plummeted 60% recently, soar to a number that is higher than Ford, GM, Honda and Toyota combined.

So, what was behind the massive drop in the stock price?

Look, I have said many times before that the stock was extremely overvalued. There is no doubt about that. But at the same time, as I have also said, when you buy a company, you are not buying what it is worth today, but what you think it will be worth tomorrow.

Many investors happened to think Tesla was worth far more than whatever the current price per share was, and the stock achieved becoming one of the largest companies in the world, far surpassing well established automakers that came before it.

The reason the stock plummeted had nothing to do with the company itself.

I have spoken at length about the kind of investor who invests in a company like Tesla. It's not an investor, per se. It's a visionary. It's a person who has other motivations for a company like Tesla succeeding.

Believers in climate change. Haters of fossil fuels. Dissenters of the oil industry.

There is a deep-rooted ideology in a lot of those who invested in a company like Tesla, and let's face it. A lot of those people are and were, liberals.

So were the investors who unloaded their shares after Musk's takeover of Twitter. They were liberals. And their message was clear. "We don't appreciate your conservative views, and we are going to show you the consequences of that."

The point here is that the massive decline in value of Tesla stock had nothing to do with the company itself, and had everything to do with Twitter. It had everything to do with where Elon Musk stands today, politically.

But of course, there is a flip-side here which I think is important to understand.

While a company mostly operates independently of its owner's politics, its politics can and does, sometimes have an impact on its ultimate performance and consumer response.

The thing is, regardless of what one's party affiliation may be, the fact remains that most people, no matter which side of the aisle they are on, lean conservative. Yes, that includes democrats. Or let's just say people who identify as democrats.

Take a poll, for example, and leave out the party line, and the answers you get become interesting no matter who you are talking to. Democrats or republicans. Liberals or conservatives.

Most people want lower taxes. Most people want less regulation and less government intrusion. Most people admire the Constitution and believe in free speech and 2A. Most people espouse freedom and liberty.

The bottom line? Most people adhere to conservative values more than liberal ones, even if they call themselves liberals and not conservatives.

Today it was announced that Tesla blew its numbers out of the park. It reported record sales, record orders, record profits and beat all earnings estimates by record numbers.

This is despite the investor fallout over Twitter, largely fueled by liberal investors. This is despite the clear message that liberal investors wanted to make known. "We don't like what you are doing with Twitter, and we want to make you hurt and feel the consequences of your actions."

I think the real answer here is also clear. Conservative minds are prevailing, and it shows in the numbers.

The liberals are, as they always are, and always have been, outnumbered. The voice and the sentiment of conservative values are stronger. As they have always been and as they remain to be now.

The stock today, on the news, did not skyrocket. But the performance of the company itself is very telling anyway. And I think it's very telling of the actual sentiment of not only who might buy Tesla cars. But who might actively invest in the company now going forward.

The playing field has changed.

Politics and business often clash. But, conservative politics actually usually come with a reward while liberal politics often come with a consequence.

Hasbro saw sales decline when it introduced a gender-neutral Mr. Potato Head. Penzey's Spice, owned by an uber-liberal guy by the name of Bill Penzey, has seen store closings due to his views and newsletters on liberal causes and issues. Disney has gotten back lash from angry consumers on its liberal stances. Spotify had to rethink its stance on Joe Rogan podcasts as conservatives spoke out against their trying to pull him from the airwaves. Mars had to pull ads and suspend their M&M's characters after they tried to make them more "woke."

Meanwhile, conservative companies espousing conservative values like Hobby Lobby and Chick-Fil-A have become behemoths of their former selves, and the valuations of their companies have gone through the roof.

Home Depot is the largest home improvement store in the world, and its founder is very conservative and very vocal about his conservative views.

All of these companies have been rewarded while the liberal ones have suffered some pain. Because again, no matter what party one assigns themselves to, conservative values still outnumber liberal ones.

While I do still believe that Tesla was extremely overvalued as a company, I actually think Musk may be on to something. And despite the massive decline in its share price and market cap, I think what he is doing now, and the positions he is taking, will make Tesla even bigger than it was before.

The people who buy his cars now, and those who invest in his company now, will be a different kind of consumer and a different kind of investor. They will be those not investing for the same reasons the ones before did.

They will be rewarding his values. They will be rewarding his viewpoint. The next Hobby Lobby and Chick-Fil-A might just be Tesla.

I am not saying Tesla is a stock to buy. I still prefer Rivian and Ford over Tesla. But what I am saying is that Tesla is a stock to watch. And one to watch very closely. Musk is a brilliant businesman, and I think he knows exactly what he is doing. And beyond that, I think his own personal values outweigh his business interests, and believe it or not...

It may make him the most successful and most powerful businessman we have ever known.

It is at least worth paying attention to.

Lead image courtesy of CNBC. Tesla (TSLA) earnings Q4 2022 (cnbc.com)