Musk eyes new horizons: Tesla boss works in a different dimension to those wanting to hold him to account, says ALEX BRUMMER
The decision by Elon Musk to take the advice of Twitter followers on the sale of 10 per cent of his £154billion stake in Tesla has brokers and governance mavens tut-tutting.
Dumping a share sale on the market on this scale looks to breach the Tesla billionaire’s pledges to regulators and hit the share price.
Tesla’s trillion-dollar valuation and Musk’s domination of the electric vehicle pioneer makes everything he does market sensitive.
Maverick: Tesla’s trillion-dollar valuation and Musk’s domination of the electric vehicle pioneer makes everything he does market sensitive
Yet in a year which has seen ridiculous valuations placed on special purpose acquisition companies (SPACs), and a new generation of retail investors challenge the big battalions using social media, Musk is not much of an outlier.
US regulators at the Securities and Exchange Commission may talk the talk when it comes to dangerous risk taking in shares and crypto, but they have been less than activist in calming the exuberance.
All that Musk is doing is embracing the cyber-universe by consulting followers and investors, and following a well-worn path for founder-entrepreneurs by selling shares to meet a tax liability.
In Musk’s case he has an eye on the Democrat-controlled Congress which is seeking to pay for some of Sleepy Joe’s spending largesse by hammering enterprise.
That is never a great idea in America where the less well-off look up to the super-rich in the belief that with the right roll of the dice, they too could be wallowing in billions of dollars.
Everybody invested in Tesla should know by now that they are dealing with genius and the Tesla founder doesn’t follow tram lines.
After all, when Albert Einstein first developed the maths which led to the Theory of Relativity, his notions were frowned upon by German academicians.
Reality is that a diluted presence of Musk at Tesla could eventually lead to the more conventional governance wanted at the car maker.
Hopefully that would be without the stultifying approach to innovation which has left much of the global motor industry dangerously short of semi-conductors and fuel cell capacity.
What is really exciting for Musk fans is the science and technologies driving his exploration of the heavens through Space-X.
Earth is still benefiting from the commercial spin-offs from the Apollo missions, including the internet. Musk works in a different dimension to the naysayers wanting to hold him to account.
Tesla is not the only tech stock causing market conniptions. Scottish Mortgage Investment Trust lost some of its zip in the last six months thanks to the unwanted attentions of China’s President Xi.
The clampdown on entrepreneurship in China saw the value of holdings in Tencent, Alibaba and the shopping platform Meituan suffer.
The day was partly saved by US pharma group Moderna. Its purer play Covid-19 vaccine triumph saw the shares triple and catapulted Moderna to the top slot in the £22billion fund.
After amazing 1,072 per cent returns over the last decade, SMIT managers James Anderson and Tom Slater are in interesting company.
Japan’s Softbank, run by the mercurial Masayoshi Son, is having Beijing trouble too. His Vision Fund took a £7.4billion hit as a result of China’s crackdown on technology firms.
Its big holding in ecommerce pioneer Alibaba lost around one-third of its value in the second quarter and a stake in ride company Didi bought for £8.8billion is now worth £5.5billion. Son is seeking to restore confidence through a £6.6billion share buyback.
Anderson, who has delivered so well for SMIT, will have hoped to have gone out on a high when he retires next April. He has told clients not to give up on China.
But Xi’s recent sabre rattling in the straits of Taiwan is not terribly encouraging.
Foot in mouth
No one should be in the least surprised that JD Sports boss Peter Cowgill has been filmed in a secret car park chat with merger partner Barry Bown of Footasylum in the middle of a competition review.
Cowgill insists the details of the meeting were reported to the Competition and Markets Authority. The suggestion is that the leaked video was a ham-fisted attempt by an unnamed rival to derail a deal.
Unfortunately for Cowgill his bombastic behaviour towards landlords in the pandemic, and a disputed £4.3million bonus, means he has a diminishing number of City friends.
Cowgill’s plan to hang around as chairman, when his double role as chairman and chief executive is disentangled, may have suffered a fatal blow.