ELON-O-MANIA!
Chapter 4: Equal Outrage from a Tesla Foe
This takes five minutes to read, or watch the video!
The world of Elon Musk is filled with polarizing personalities expressing passionate opinions. There’s almost no middle ground.
One reason I write this column is to go beyond Elon to meet the people who feel strongly about him and the companies he’s created.
You’re about to meet someone who is not a Musk fan. In fact, he’s quite a foe.
First, though, Tesla had a fantastic quarter. Sales nearly doubled from a year ago. Net income topped $1 billion for the first time. However, Elon said the second half of the year will be hampered by a lack of available parts, including computer chips.
Here's what grabbed my interest. Musk announced he may skip future earnings conference calls, “unless there's something really important that I need to say,” he told analysts.
Should I read something into that? Elon wants to stop talking to analysts after earnings come out? Hmmmm.
In any case, Tesla shares fell the day after earnings. They’re down about 30% since January.
Gordon Johnson thinks they have another 90% to go.
Buckle your seatbelts, Tesla bulls. This guy thinks you’re in for a bumpy ride.
Johnson is the head of GLJ Research, and he’s been railing against Tesla and Elon Musk since the dawn of time, which is around 2018.
Johnson insists Tesla stock is overpriced, and even after this week’s blistering beat on earnings, he found nuggets to validate his thesis that Elon is the antithesis of a visionary genius.
“Somewhat overshadowing these results was a material decline in TSLA earnings quality,” Johnson wrote in a note. In particular, “Musk said, multiple times, FSD does not work.” FSD stands for “Full Self-Driving,” an important part of Tesla’s Autopilot system. FSD is eventually supposed to let cars drive themselves. Elon said on the earnings call that FSD will happen, but he added that paying for it now is “debatable.” Ouch. People have already been paying for it.
So why am I talking about Gordon Johnson? Welp, he reached out to me after I profiled controversial Musk superfan Omar Qazi earlier this month. Gordon called my column “despicable journalism.”
I’ve been called worse.
Johnson was upset with me because Qazi has a history of lashing out at people who criticize Musk and Tesla. In other words, people like Gordon Johnson.
I thought it only fair to profile Gordon in the spirit of equal outrage.
Like Omar, Gordon attracts fans and haters. Both men are passionate, determined and vocal.
Only one of them can be right.
Johnson told me Tesla first showed up on his radar more than a dozen years ago when he visited the company’s production facility. “I thought it was interesting.”
But he didn’t start paying close attention to Tesla until 2016, when he was covering another company.
“We had a sell rating on SolarCity,” he says. Tesla bought the nearly insolvent solar power company which was founded by Elon’s cousins. Johnson felt Musk was pulling a fast one to save a failing business — and Elon’s investment — by doing things like going on the set of “Desperate Housewives” to demonstrate solar panels which turned out to be fake. “We just saw it as very nefarious.”
Gordon Johnson then started covering Tesla and eventually slapped a “sell” rating on the stock. Most investors ignored him. Still do. However, Johnson says his beef with Tesla is bigger than the stock price.
It’s about trusting the stock market. It’s about the safety of drivers. He believes regular folks volunteering to test Full Self-Driving on their Teslas are subjecting themselves to great risk. Consumer Reports — a long time FSD critic — agrees, and the U.S. government is investigating 10 deaths which may have involved an overreliance on Tesla’s Autopilot.
Johnson believes FSD will never achieve full autonomy and that drivers who paid $10,000 for it have been duped.
“When you’re selling a product for five years for $10,000 a pop, and you’ve made hundreds of millions of dollars on it,” he says, “at some point, you know, it becomes nefarious.”
He uses the word nefarious a lot.
Johnson rattles off a list of broken promises:
— “They launched the roadster in 2017, still not here.”
— “[Elon] said there was going to be a $35,000 Model 3 car, still not here.”
— “He said in 2020 there’s going to be a million robo-taxis on the road.” Still not here.
— At Tesla’s highly-anticipated Battery Day last year, “They didn’t introduce a battery.”
— Johnson says there’s still no semi (pushed back until 2022), and still no Cybertruck.
Elon fans say the Tesla CEO is just over-optimistic, something Musk has even said about himself. Gordon Johnson doesn’t buy it. “There’s a point at which optimism turns into something more nefarious.”
There’s that word again.
Johnson suggests Musk’s unfulfilled promises have added billions of dollars to Tesla shares as investors believed the CEO, enough to move the company into the S&P 100. That creates a moral hazard, he says, as other CEOs may try to copy Musk’s behavior.
“You remember Nikola?” Johnson asks. “They rolled their truck down the hill, inverted the camera, and said the truck was working. A lot of people invested in the stock as a result.”
Gordon Johnson is like a voice crying in the wilderness, hoping someone, anyone — shareholders, analysts, regulators — will listen. “I think it’s the most overvalued stock I’ve ever seen, I think it’s the most misunderstood story I’ve ever seen, and I think soon that’s going to become consensus.”
He believes with all his heart that someday the stock will sell off, especially when larger and more-established carmakers grab a significant piece of the electric vehicle pie. “People equate Tesla to Amazon,” he says. “I think Tesla is closer to AOL.”
So... while he hates Tesla stock, it may surprise you to hear what Gordon Johnson thinks about the Tesla car.
“I think the Model S is a beautiful car, no doubt about it.”
He won’t be buying one. He doesn’t believe the car, or the stock, will age well.
Do you agree? What would cause Tesla shares to fall to earth? Let me know in the comments, or email jane@janewells.com.