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Media in Attack Mode Over Elon Musk

“2022 saw a lot of shareholder wealth destruction for Tesla,” the conversation began on CNBC last week, with added emphasis to get the point across.

“It’s hard to say if it could go any further down; it’s been a horrible season for Tesla,” the analyst pointed out with an extra dose of intensity.

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Many have pointed out that the reporting on the company in recent months has increased both in its fervor and in its negativity. In fact, some think the media at large has seemed breathlessly gleeful, almost gloating about the recent decline of their once-prized Tesla.

The great Rush Limbaugh used to say that liberalism was the religion of the Left. He believed that, for its adherents, the ideology trumps all, including God, family, country, relationships and careers.  

Is that the explanation as to why the legacy media has turned so quickly and viciously against their darling, Elon Musk? All because he dared to offer transparency, inclusion, equality and diversity of thought to the social media network previously dominated by liberals?

“Musk has gone from a superhero on Wall Street to a villain,” said Dan Ives, Wedbush Securities Managing Director & Senior Equity Research Analyst, on a financial program last week. “I think for someone that’s viewed as a modern-day Albert Einstein, Thomas Edison, it’s more of a Howard Hughes-type moment, right? I think the question now is, does he start to focus more back on Tesla, away from Twitter? Because that’s really been it. It’s a brand issue. It’s been a black eye for Musk. A black eye for Tesla. But it goes back to investors. This is a name they want to own as a transformational company. They just can’t keep having Musk, cause every time he tweets something, the controversy, it’s created ultimately a black cloud for Tesla.”

Solid analysis, indeed. However, why do some investors and members of the media consider the ushering in of more Twitter transparency and fairness to be a controversial black eye? Could it not also be considered principled and heroic?

“Tesla’s been egregiously overvalued, so we have seen the repricing of Tesla throughout the year as competition has credibility come into the market. As people have understood the outlook for pricing pressure. And the longer-term trajectory, where everyone assumed that Tesla would operate in a vacuum hasn’t come together. Forget about robotaxis and the other daydreams that were out there,” Roth Capital Analyst, Craig Irwin, told Yahoo News, basing his analysis on company fundamentals. “The company’s been executing, but not nearly as well as the daydreamers, so the lofty valuations come off. And it has to come back to earth. So I think Tesla’s short-term trading is really going to be a function of whether or not Jack Dorsey goes back to Twitter or maybe Dick Costello. Put Elon’s focus back on the company and on, you know, driving units. But they’re having problems. That’s why they’re discounting. So I’m still bearish. I’m sticking with my $85 price target.”

Although in this instance, Irwin cited fundamentals, such as lower production compared to other manufacturers, Musk’s approach with Twitter seems to be playing a large role in the price target calculations offered by others.  

“It is unfortunate that Elon Musk has had a semi-antagonistic relationship with politicians of one party,” the long-term Tesla bear added while commenting on the coming EV tax credit and the impact on Tesla from the Inflation Reduction Act.

Were media members citing it as “unfortunate” when Musk, previously a lifetime Democratic Party voter, championed causes near-and-dear to the political Left? Was it “unfortunate” when he seemed to be “semi-antagonistic” toward Republican priorities?

Tesla is indeed down bigly for the year. The numbers don’t lie, with most of the stock’s roughly 70 percent loss coming in the past couple of months. Yes, the pandemic is once again causing troubles in China, and the U.S. recession may be deepening as we begin 2023. True, these factors could certainly be major headwinds for any premium car manufacturer, such as Tesla. However, no other car company can boast the debt-free balance sheet and pricing wiggle room Tesla possesses. Many analysts have pointed out that the company can continue to sell cars at a lower profit margin in an effort to maintain or grow market share until America’s economic malaise is eventually corrected. 

Still, many think the dire media rhetoric doesn’t quite match the situation on the ground regarding Tesla. For the past couple of months, we have watched the financial media mob pile on and amplify a narrative – seemingly because it now satisfies their political point of view.

When Musk spoke mostly about solving the “climate crisis,” he was their media darling. Now that he espouses freedom of speech while uncovering numerous scandals which benefited liberals, they seem to have turned on him. And it goes both ways. A year ago, conservative media stood, on average, much more anti-Musk than it does today. 

Musk reassured Tesla employees this week in a company-wide memo, urging them not to be scared by the “stock market craziness.”

Yahoo finance reporter, Brad Smith, mentioned that fact last week, then followed up with a laugh, saying, “this move coming from Musk as the stock heads for its worst year on record.”

The rest of Musk’s memo to employees read, “As we demonstrate continued excellent performance, the market will recognize that. Long-term, I believe very much that Tesla will be the most valuable company on Earth!”

The network noted that Morgan Stanley analyst Adam Jonas “slashed” his 12-month price target for the company to $250. That lower target represents more than a 100 percent increase from its current price, a feat that normally would have investors rushing to jump on board. In fact, the average price target from analysts is $250 over the next twelve months. Some analysts, in fact, see Tesla climbing back to $400 or $500 per share in the next year.

Among any criticism of Musk in recent months is the charge that his Twitter purchase has negatively impacted his flagship asset, Tesla. But is it the fact that Musk is “distracted” by Twitter, or the fact that he is democratizing Twitter and moving it in the direction of fairness and freedom. And away from radical, left-wing monopolized control?  Could that be the real reason for the venom and the reason the attacks have seemingly increased in recent months, in tandem with Musk’s countless “Twitter Files” revelations about the corruption and duplicity throughout the company in recent years.

“Employees are also privy to stuff like, is demand softening? They can actually see that, along with Musk kind of being away from the picture. Being in Twitterland, doing what he’s doing there,” one reporter mentioned.

Also pointed out by reporters over the past weeks is Musk’s selling of more Tesla shares, presumably in connection to his acquisition of Twitter. 

Regardless, most analysts and reporters don’t seem content to simply report the facts. Many seem personally annoyed by Musk’s moves and thrilled that the company is down approximately 70% on the year.

Meanwhile, fellow tech giant, Meta, is down a comparable 65% on the year. However, that fact doesn’t seem to bring out the anger and hostility Tesla’s decline has elicited. Some theorize that this is a result of the fact that, unlike Musk who endorsed Republicans prior to the 2022 midterm elections, Meta is stewarded by Mark Zuckerberg, who contributed large amounts of money to help Democrats in 2020.

And while many objective observers might agree that left-leaning drivers might be increasing their virtue-signaling by pulling away from Tesla, the opposite may also be true, as centrist and freedom-loving consumers now find themselves attracted by Musk’s recent stance.  Might the net result, based solely on consumers lost or gained, be a wash?

The confusion stems from the fact that many analysts seem to be cutting their price targets for Tesla not based on fundamentals or estimates but rather on emotions and sentiment.  In the long run, as Warren Buffett often points out, fundamentals usually win out. A fact of which these market experts are well aware.

“In the short run, the market is a voting machine,” Buffett has said. “But in the long run, it is a weighing machine.”

While many feel the “voting machine” is currently working overtime in financial newsrooms, others expect the “weighing machine” to continue lifting the company to new heights in the years to come.

“Yes, Tesla, Twitter, Elon Musk, there’s these distractions,” CNBC Contributor Tim Higgins summed up last week. “But this is a growth stock story, and if the growth can continue then, people are going to be excited again.”

Rick Schultz
Rick Schultz
Rick Schultz is a former Sports Director for WFUV Radio at Fordham University. He has coached and mentored hundreds of Sports Broadcasting students at the Connecticut School of Broadcasting, Marist College and privately. His media career experiences include working for the Hudson Valley Renegades, Army Sports at West Point, The Norwich Navigators, 1340/1390 ESPN Radio in Poughkeepsie, NY, Time Warner Cable TV, Scorephone NY, Metro Networks, NBC Sports, ABC Sports, Cumulus Media, Pamal Broadcasting and WATR. He has also authored a number of books including "A Renegade Championship Summer" and "Untold Tales From The Bush Leagues". To get in touch, find him on Twitter @RickSchultzNY.

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