Tesla CEO Elon Tesla tells workers to forget about “stock market chaos”

Yahoo Finance’s Pras Subramanian joins the Live show to discuss reports that Elon Musk has addressed Tesla staff in a memo thanking them for a strong fourth quarter and assuring them to not be bothered by stock price uncertainty.

Video Transcript

BRAD SMITH Elon Musk, Tesla CEO, assured his employees in a memo distributed throughout the company that they should not be affected by “stock market crazyness,” unquote according to reports. As the stock is heading for its worst year ever, this Musk move comes as a surprise. Pras Subramanian from Yahoo Finance has the latest. Pras, tell us about the memo that was circulated internally.

PRAS SUBRAMANIAN So a couple [INAUDIBLE] Musk went out last evening, thanking employees and customers for another successful Q4. He also mentioned that he was not bothered by the stock market’s craziness in the PS section. Tesla will, in the long-term, be the most valuable company worldwide, et cetera, and things like that. This is especially true when the stock price of Tesla has fallen 70%. Stock-based compensation is not something employees are happy with. If that were the case, I wouldn’t be surprised.

Employees also have access to information such as demand softening. They can see it. They can definitely see it. Musk is also able to see it, despite being far away from the scene, and being on Twitter land doing what he does. They kind of see what is happening. Musk may have finally addressed the issue to his employees. So–

BRAD SMITH After he had sold more than $20 Billion–

PRAS SUBRAMANIAN Exactly.

BRAD SMITH –worth of shares

PRAS SUBRAMANIAN Exactly.

BRIAN SOZZI Brad, it is fascinating to see Tesla rising in the premarket, currently up 7%. According to that internal note, they are still reacting to Musk’s positive comments. Adam Jonas, a longtime Tesla bull, is also present. He is here to reduce his price target on Tesla to $250, but it still assumes a 117% upside. Another name on Wall Street has cut these price targets for the year. Pras, I still think these targets are absurd. It’s more than just Jonas and Morgan Stanley.

PRAS SUBRAMANIAN Yes, it was. There was another bank, but I don’t recall the name. They had a target of 300, and they were able to reduce that number to 2 something. It’s still half the stock price right now. It’s hilarious. Their rating is unchanged, even though they are cutting their targets. This suggests that they are still confident in the company’s long-term story in terms of its operations and how they will replenish the entire global population of gas-powered cars. That case seems to be intact, I believe. It’s the short-term question, what’s really going on.

BRIAN SOZZI Tesla has to achieve a lot. China’s production must kick into gear as soon as possible. It is necessary to increase sales. Profits must be strong even in recession. Pras, these targets seem absurd.

PRAS SUBRAMANIAN Yes, it’s possible. We’ve seen Tesla achieve it before. They can make many cars. They can also make them cheaper and with higher margins than any other manufacturer. We’ll see. Look at VW, GM and Ford. They will catch up. And that’s what I believe will be the real reckonings in 2024. How are they going to keep their dominance?

BRAD SMITH This was the point that Edmunds Research data revealed was very interesting. It was looking at the areas where attention or mindshare is focusing with respect to the EV purchasing experience. Are there new competitors, or new ones in the automotive landscape? Or in the EV space specifically, are legacy automakers ramping up production, and still retain some of their brand equity in existing models that they electrify? Is there a shift in the consumer mindset that we are seeing?

PRAS SUBRAMANIAN We see them, they see the Fords trying to go online to purchase cars. They’re not yet there. Tesla: I can order a car right now on my app and have it delivered next week. Now comes the question of service. How do I get my car serviced. They aren’t really good at this part.

They can still sell the car. They have plenty of stock. They’re not GMs and Fords. In fact, there aren’t enough Ford F-150s available yet. These cars are not available yet to buy. That’s why I believe that people who are waiting for Silverado, F-150 Lightning and other similar cars have a major problem.

BRIAN SOZZI Pras Subramanian. Thank you so much. All right.