Trade The Journey

Trade The Journey

Biggest Asset or Liability?

I’m sure most have heard about this or saw the video where Elon Musk partakes in smoking marijuana during a show with Joe Rogan. There was an uproar regarding this situation and the tweets he sent out about taking Tesla private. Tesla settled the lawsuit with the SEC about the tweets.

It is reported that Mr. Musk offered Tesla an ultimatum and Tesla backed him. Tesla hoped to reach its goal of maximizing its production efforts and reaching a new level for producing the model 3. They are desperately making attempts to become profitable. But that is not the important part of this post, whether or not its financials match its lofty goals.
This is about the CEO and what kind of asset or liability is he becoming to the company. I like to consider myself aware and up to date in the happenings of the world. Rarely do I remember Elon Musk being mentioned in the news, except for his involvement with the current administration and his past successes of innovation and exploration.

Never was it negative or was he the subject of concerned investors invested in Tesla. Personally, I don’t care if Elon Musk smokes marijuana in his personal time but I do believe that his position should be one of extreme caution. There a lot of people who do not support marijuana and there are others who believe that the CEO should maintain a clean image. Whatever the reasons, this is a red flag.

When he began to appear in the news, he added more volatility to a stock than needed and that’s when it becomes a major problem both to investors and to the company. As an investing student, I thought that the upcoming production reports which were reportedly positive would add to the value of the stock. I am sure the experts are smirking through the computer at my inexperience.

I brought into Tesla by purchasing a slightly out-of-the-money call option with the hopes of Tesla’s stock rising and of course, it plummeted. No worries, I had a small position. One of the variables I should have been more aware of was the volatility of the CEO and the ongoing dissatisfaction with him. He does not seem likely to step aside and if he does, could this situation be deja vu where like Apple, Tesla ends up asking its eccentric founder to come back.

Or will the CEO bounce back, and this be a moment in time he is able to overcome? No one knows but what we do know, is that he is just as important as the financials, production, and development as Tesla moves along. He is now a variable that we have to consider when researching and accounting for Tesla’s stock value.

Should we give each company’s CEO equal attention when looking to invest? I should hope not.

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