Has Elon Taken On Too Much?

by | Jun 11, 2024

Elon Might Be Taking on Too Much

Elon Musk is the single richest man on the planet. It seems like he can do nearly everything, from space travel, to AI, to social media, to solar, to electric vehicles.

But has he taken on too much and is it causing some of his businesses to suffer?

I am starting to believe the answer is yes.

So, let’s dive in… Elon Musk is in charge of:

  • SpaceX, the rocket company
  • Tesla, the EV giant
  • X (formerly Twitter), one of the largest social media platforms
  • SolarCity/Tesla Energy, a solar energy company
  • xAI, an artificial intelligence company

That’s a lot for one man to handle, especially with 11 children.

I have 7 of my own and it’s a full-time job without the trillion dollar companies to manage.

Elon’s focus has simply become too split between his different endeavors and we are starting to see his businesses suffer for a number of reasons.

Other than Tesla, which is publicly traded, we don’t have complete insight into his other businesses, but Elon does enough public talking that we get an idea.

That said, since Tesla is the publicly traded company we can most easily trade, I want to focus on it today.

Here’s Tesla’s performance since the start of the year:

It’s down 31%.

Vehicle sales have dwindled in recent quarters, production quotas have been missed, and it seems as if innovation has grown stagnant in the company despite the recent launch of the Cyber Truck.

And here’s what might be the most important part of Tesla’s story:

The majority of folks who are Tesla fans and want to drive a Tesla already have a Tesla. And unlike an iPhone, you don’t upgrade your car every year (this is why stocks like Apple and Amazon and Nvidia have such a leg up on a vehicle manufacturer — repeat customers are a massive part of the equation).

Then layer on the fact that every major automaker is going all-in on the EV trend and we can see competition eroding Tesla’s market share at an alarming rate.

According to a study from Cox Automotive, Tesla sales accounted for 55% of all EVs sold in the US in 2023, down from 62% in 2022.

And at the start of the year in Q1 2022, Tesla had a 75% EV market share in the US. 

In Q1 2024, Tesla is down to 52% of the EV market share in the US.

That’s a big drop.

So whether this is purely a fundamental stock equation… Or has more to do with Elon’s other interest, I’m not sure.

What I do think we’re faced with is an alarming lack of sustainability in growth potential for the king of EVs.

I am not counting Elon out yet by any stretch. If you told me that in the summer of 2025, Tesla was trading for double the value it is today, I wouldn’t even be that shocked.

But I see a more likely path ahead: That Tesla moves from a fan favorite “tech” company to more of a ho-hum EV auto manufacturer and Elon shifts more focus to SpaceX than anything else (I expect it to have a monster IPO in the not too distant future).

So if this plays out, I’ll take some sell positions on Tesla along the way. It’s kind of a nice hedge for me anyway since I am very long bias on the Magnificent 7 overall.

— Nate

P.S. Did you see what Stephen is up to? Check it out.

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