Some Interesting Twitter Threads About the Elongate Story

Tim Farrar has a long thread that looks at SpaceX’s valuation and ability to raise money — both of which are crucial to its continued development of the Starlink satellite broadband constellation and the Starship/Super Heavy rocket. A lot of that valuation is dependent on confidence in the company and its founder, Elon Musk.

Farrar keys off a long thread by E.W. Niedermeyer, a journalist who covers the automotive industry who has been long critical of what he sees as shortcomings of Musk and Tesla Motors. To summarize, he thinks Tesla is overrated as a company, and its massive valuation and increase in stock price has been driven by Musk’s ability to control information and the public narrative about the venture. (Tesla’s stock price has fallen sharply since Musk announced plans to spend $44 billion to buy Twitter, diminishing the billionaire’s net worth and constraining his ability to fund the deal.)

The key points in both threads is that both companies have been overvalued, and that neither one generates all that much cash. The ability to raise money is highly dependent upon confidence in Musk, Tesla’s financial reporting, and the narratives the billionaire produces about a future with electric vehicles on Earth and colonies on Mars. All that confidence could be beginning to fade away.

It’s always been interesting to contrast the Musk’s image in the space and automotive sectors. With space, he’s seen as a genius, and has portrayed himself as a savior of the human race with his plan to establish a colony on Mars. His reputation in the automotive industry is more mixed, with a considerable attention paid to quality control issues with Tesla cars and Musk’s failure to deliver on a number of key promises. Questions have also been raised about the reliability of Tesla’s financial reporting.

And then there’s Musk’s celebrity. SpaceX and Tesla don’t really have public relations and marketing departments. Musk has used Twitter to handle these activities. Everything he tweets — even his bowel movements — gets written about somewhere online. The problem with this is when he faces accusations that he can’t either easily brush off or ignore. There’s nobody to take the arrows that people aim at him. There’s no buffer. Musk is — pardon the pun — totally exposed. He risks tweeting things that he might later regret.

Niedermeyer thinks that Musk’s celebrity is going to work against him. There is a strong tendency by the celebrity media to build people up, and then the tear them down. Niedermeyer believes there are additional stories that will come to light concerning Musk’s business dealings and personal behavior that will surface in the wake of the accusations about exposing himself to and propositioning a flight attendant for sex.

The allegations raised by the Insider story are serious; in some cases, they can lead a board of directors to fire a CEO or other high-ranking executive. It seems unlikely in this case, but if more negative stories emerge about Musk’s behavior, it could become a real possibility. SpaceX and Tesla might have to contemplate Musk-less futures.

Musk has made a hard turn to the right with his bid to purchase Twitter in the name of free speech, and his promise to reverse the company’s permanent ban on Donald Trump. After being contacted by Insider, he tweeted that he will vote Republican in the next election, and that he expected “dirty tricks” attacks on him over the next few months to increase for abandoning Democrats. The richest man in the world is playing the victim, a martyr for free speech and truth, in the hopes of rallying people to his side and discrediting claims about his behavior.

Will it work? Will the controversy fade away? Or will other alleged scandals emerge?

In any event, some food for thought here. It will be interesting to see how all this plays out.