All Hat And No Cattle

Tesla investors better hope Donald Trump wins this election.

A lot of my readers and social media followers give me grief about my skeptical stance on Tesla. Years ago, I only had to take insults and the occasional berating from rabid Tesla investors. Nowadays, thanks to Elon Musk’s coincidentally timed and decisive shift to the right side of the aisle, I occasionally take abuse from people in my own political echo chamber.

But that’s OK — such is the world of being an underdog politically, as a libertarian, and an underdog financially, being an Austrian economics advocate and short seller.

To extend an olive branch to those who are undoubtedly going to bash me as a result of this article, there are things I will give Elon Musk credit for. He single-handedly spearheaded the movement into electric vehicles, he has helped breathe new life into the country’s appetite for space exploration via SpaceX, and he has allowed me to continue to run my mouth on my social media platform of choice, X, after purchasing the platform to make a point about social media censorship that, ultimately, is good for the country, in my opinion.

But the fact is that Musk wouldn’t have been able to do any of these things without the help of the trillions of dollars of liquidity that splash around public markets. When you list publicly and are granted access to capital markets, and cash that comes with them, it’s a privilege and a wonderful tool for fast growth. Over the last century, capital markets have helped some of the world’s best companies expand and grow quickly, raising money multiple times before they are ever profitable.

The trade-off for access to all of this capital, tons of free media, and in the case of companies like Tesla, access to the “passive bid” that comes as a result of being placed in major stock indexes, is that companies must adhere to a stringent set of uniform rules to ensure markets remain fair and orderly. As a private company, as long as you’re not breaking the law, you can do whatever the hell you want. You can pay yourself whatever you want, you can run your business any way you want, and nobody has any right to question you or keep you in check. But being a public company is a completely different story: you have to report to a board of directors, who have a fiduciary obligation to shareholders, you must disclose any and all material events to the public, you must regularly report your financials and the state of the business in accordance with stringent accounting standards and SEC rules — and you must do all of these things truthfully.

And herein lies where the gray area always seems to be with Elon Musk.