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Elon Musk says Tesla shares are only going up. But he sells them anyway

Aly Song/Reuters

Aly Song/Reuters

Elon Musk made another of his predictions.

During Wednesday night’s earnings call, the Tesla CEO claimed his company, a niche luxury car maker, will one day be worth more than Apple and Saudi Aramco. Combined. Together, these companies are worth around $5 trillion. Tesla’s market value is $650 billion, down 7% after the company backtracked on a 50% growth projection this year.

Although Musk’s statements imply that Tesla shares are incredibly valuable, given his claim that the company will one day be worth more than five times what it is now, he is poised to sell this month- ci a significant number of the approximately 155 million shares he owns.

Why? To buy Twitter, of course. At $54.20 per share, it “clearly pays too much” for Twitter, Musk said on the earnings call. Because it will also have “enormous potential”, he argues.

But investors should beware: Despite his sometimes deserved reputation for bringing the future closer to reality, Musk also has a penchant for over-promising and under-delivering.

Musk said his cars would drive themselves, and they don’t. Musk said the Tesla Model 3 would only cost $35,000, and it’s not. Musk said that by using robots, he could transform the company’s original factory in Fremont, California into a fully automated “alien dreadnought” populated only by artificial intelligence, a world in which all these pesky humans who want to be paid and treated fairly (California sued Tesla alleging hundreds of complaints from Tesla workers about racism in the factory) have been replaced. Later, Musk seemingly ditched that idea, saying “robots are really bad at picking up stuffed animals.”

The thing is, Elon Musk promises a lot. Most didn’t happen.

Investors, however, continue to bet big on Tesla. That’s because the company’s stock performance isn’t based on where Tesla is now, but where it’s headed — or where Musk is convincing investors it’s headed: cars. of Tesla will drive themselves. It won’t just be personal transportation vehicles as we know them, but mobile money will flow by itself, with each car renting out when its owner doesn’t want to be driven by it. Their full potential value — over $100,000 each, as Musk puts it — will finally be unlocked.

So exceeding the value of Apple and Saudi Aramco is certainly not beyond the realm of human possibility. After all, we’ve seen far more unlikely things happen in financial markets.

By distinguishing between promise and promotion, Musk managed to make the two almost indistinguishable. Regulators have had things to say about it, of course.

But investors should take a close look at what Tesla is, right now. This might provide a better predictor of the direction Tesla is taking than statements from the CEO with deeply vested interests.

Its second-quarter profits were 47% higher than GM’s (GM announces third-quarter results next week), but Tesla is worth more than 13 times as much as its century-old competitor. Who, by the way, has a real $30,000 EV for sale.

Tesla will add vehicles to its lineup, says Musk. It will make a van. Sportscar. A bike. A full range of things that are promised, but no one has ever seen being driven by a customer.

But Tesla makes four cars now. A full-size SUV, which rivals other full-size offerings from Mercedes, Porsche, Volkswagen, Audi, BMW, General Motors, Toyota and many more. A full-size sedan, which rivals similar.

And a smaller SUV and a smaller sedan, which do the same thing. And, if we’re being charitable, let’s say Tesla also makes the Semi, even though it didn’t deliver one.

So we have a car company that makes four cars and a truck. Mercedes, on the other hand, offers at least 40 different models worldwide, in my opinion. Of course, Mercedes doesn’t offer as many purely electric cars as Tesla, but it already has two this year and more on the horizon. Far more than four cars and a truck, at least, and it has a proven history of doing so.

It doesn’t exactly match a company beating Apple and literally the Saudi state oil company.

Tesla can do amazing things. You just need to wait.

Correction: An earlier version of this story misrepresented the combined value of Apple and Saudi Aramco. It’s about $5 trillion.

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