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Don't worry, work harder: Musk's message to employees on 'market madness'


Tesla stock has had a tumultuous rise and fall. It has just closed its worst month, quarter and year on record. It overtook Meta as the worst performing stock in 2022 among the most valuable tech companies. Things have gotten so dire that CEO Elon Musk has reappeared at Tesla after seemingly disappearing down the deep, winding corridors of Twitter. As part of a year-end thank-you email to Tesla employees, Musk tried to assuage employee concerns. “Don’t be too bothered by the stock market madness,” he appeased. “As we demonstrate continued excellent performance, the market will recognize it.”

Always temperamental, often brilliant, and frequently steeped in minutia, Musk the human has also been through a bit of madness this year. Has he finally seen the light of his actions and their direct correlation to Tesla’s “market madness”? Has 2022 been an outlier for the all-electric carmaker, like many traditional automakers, due to geopolitical supply chain issues and inflationary pressures? Or is “the real difference” for Musk is that his legacy is at stake, that as a visionary he can contribute to a shortfall where Tesla’s promise to constantly innovate and be ahead on the car peloton can evaporate?

Here is the text of the email Musk sent to Tesla employees on Wednesday.

From: Elon Musk

To everybody

Subj. Last days

Date: December 28, 2022 [Time Stamp removed]

Just a quick note to thank you for your hard work and congratulations on an outstanding execution in 2022!

With many cars arriving at the last minute, it is important to mobilize and do everything in our power to ensure that our cars are delivered to customers who have ordered them before midnight on December 31st. Plus, every extra car we produce that can be delivered on time counts too.

Please do your best over the next few days and volunteer to help deliver if possible. It will make a real difference!



By the way, don’t be too bothered by the stock market madness. As we demonstrate continued excellent performance, the market will recognize it. In the long run, I firmly believe that Tesla will be the most valuable company on Earth!

Musk sends out a year-end memo to employees every year. As it has done in the past, it asked employees to support the cause of maximum deliveries by volunteering to help get new cars into the hands of customers. In other parts of the year, this work is done by salespeople and delivery teams.

Employee focus on Tesla stock valuation

In its 2021 SEC annual filing, Tesla explained that “we consider our relations with our employees to be good. Our primary human capital goals in running our business include attracting, developing and retaining top talent while embedding the principles and practices of diversity, equity and inclusion into our core values.

Relationships involve a give and take, a series of opportunities where each side benefits, or where the loss is felt in relative proportion by both sides. The “MoreoverThe Musk addendum included in his 2022 year-end email to employees refers to the beating Tesla stock has taken this year. Many Tesla employees, including factory workers, are paid with stock-based compensation.”The majority of our employees have the opportunity to receive additional Tesla shares each year based on their performancesaid the 2021 filing.

Tesla’s unexpected and rather sudden low value — the “market madness” Musk referred to in his company-wide email — may have deterred employees, as recent grunts from behind-the-scenes employees.

Usually, the price of a stock is determined by supply and demand in the market. If there is a strong demand for its shares, the price will rise. If the company’s future growth potential looks doubtful, sellers of the stock can drive its price down. Tesla stock does not necessarily follow this valuation pattern, perhaps more influenced by other factors, such as what is happening with Elon Musk.

Much of Musk’s salary is non-cash, although that’s not unlike other CEOs. Musk was compensated vigorously with shares of the company. Musk’s compensation plan initially totaled tens of billions of company shares, with the stipulation that he met performance targets. Tesla has been asked to explain its executive compensation, even though Tesla’s board has defended the compensation package. Even in the atmosphere of CEO “greed,” Musk’s extravagant compensation plan stands out starkly from that of other CEOs.

This means that as the value of Tesla stock increased, the association of the Musk brand with Tesla as a product also increased. As Tesla shares soared, they created a net worth of over $300 billion at one point.

Let’s say other shareholders reaped the gains as well, perhaps even thinking its rise would continue indefinitely, that is, until its 2022 plunge.

A complaint against Musk filed in 2018 by Ed Kim, vice president of industry analysis at AutoPacific, sums up the dilemma: “Elon is Tesla, Tesla is Elon.” Musk is Tesla’s resourceful leader, and Tesla depends heavily on his exceptional talents and active participation in the design, production, and marketing of Tesla vehicles.

Tesla stock valuation roller coaster in 2022

Shares of the company have rebounded a bit this week, after falling 11% on Tuesday. Tesla shares fell 42% in December and nearly 70% this year. The precipitous fall resulted from concerns over falling demand for electric vehicles, compounded by Musk’s activity in various parts of Twitter’s day-to-day management operations. Additionally, Musk has sold tens of billions of dollars of his Tesla stock this year, in part to fund that $44 billion purchase of Twitter.

Musk blamed Tesla’s share price decline on rising interest rates and the activities of the Federal Reserve. Not everyone agrees with Musk’s assessment, of course. Many investors, Wall Street analysts and employees consider Musk’s focus on Twitter and large personal sales of Tesla stock to be the main reasons for the stock’s recent performance.

Final thoughts on Tesla’s ‘market madness’ heading into 2023

Analysts expect Tesla to deliver 442,452 vehicles in the fourth quarter, according to Refinitiv data. Tesla is targeting 50% year-over-year growth in vehicle deliveries, but has warned investors it may not hit that target every year.

While the fragility of globalization is exposed, the result in the automotive world is likely to be greater cost instability, less cushion to profitability, and further disruption to Tesla’s production capabilities for the foreseeable future. Compounding Musk’s distraction is escalating global economic dilemmas, with signs China’s demand for new electric vehicles is slowing, indicating the company could see weaker-than-expected growth.

Then again, despite criticism of Musk and his absence from Tesla, several Wall Street investors currently see Tesla’s low stock price as an opportunity. Cathie Wood and her investment firm Ark Invest recently bought more Tesla shares. Ben Kallo of Baird Equity Research hailed Tesla as the “Best Idea” stock for investors in 2023. Morgan Stanley analyst Adam Jonas continues to stick with Tesla, citing valuation, cash flow, innovation and cost control for Tesla to maintain its rating. “Tesla may be able to extend its lead over the EV competition,” Jonas said.

We can’t wait to see what 2023 brings for Tesla.

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