One of Tesla’s most loyal and longtime shareholders is expressing wavering faith in the electric vehicle (EV) company with Elon Musk at the helm.
"Most of our clients have Tesla, so it affects a lot of people," Kawasaki Wealth and Investment Management President and CEO Ross Gerber said on "The Claman Countdown," Tuesday.
"Relative to other tech stocks, Tesla's vastly under-performed since Elon has taken such outspoken, and in my mind, controversial, negative views," he continued. "Many of my clients, and I tweeted this several months ago, were furious and sold their stock. And now it turns out that that was probably a good move because the stock is much lower from then."
Over the last six months, Tesla’s stock has lost about 22% of its valuation. At the same time, CEO Musk has come under scrutiny for allegedly amplifying antisemitic content on X and being accused of drug use, all while he’s made a recent plea to have more control of Tesla.
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"As a firm, we've been forced to lower our allocation to Tesla because, as we've seen, the problems mount and the solutions that we see [are] not being implemented. We've had to be prudent investors for our clients and understand that the story has changed. The Tesla story is not the same," Gerber explained.
The investor further argued that the EV maker’s board consists of Musk’s family and friends, and that he’s "never seen a board more conflicted than Tesla."
"Elon's pay package himself is worth $50 billion today, which you would think would incentivize any human on Earth, right? So when you look at his pay package, plus his stake, it's closer to 20% of the stock, and he fully controls the board," Gerber pointed out.
"And what he's basically saying is: I want you to give me like $30 to $50 billion of [more] compensation for me to do my fiduciary responsibility to the company," he added. "So there's never been a more delusional CEO that I've ever invested with… It's crazy, like $50 billion isn't enough to motivate somebody?"
Gerber also criticized Tesla’s dynamic pricing model, saying it "hurts" the company because it’s not creating any new demand.
"When they make more cars, they have to lower prices to sell them because, essentially, they're not creating any new demand. And most of the EV buyers who want an EV have bought an EV," the adviser noted. "So I don't see where Tesla goes from a sense of earnings. They'll sell more cars, but I don't see how they make more money doing that with their current strategy."
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Tesla will release its latest earnings report after Wednesday’s closing bell. Its market capitalization sat around $655.3 billion as of Tuesday evening. Shareholders and analysts will be watching closely for overall delivery goals, artificial intelligence advancements and the long-awaited Cybertruck release.
"What we're really hoping for is not a miss. And that's really my concern," Gerber said, "because obviously, they've been having to discount and throw lots of incentives to sell the cars that they're making. So that's what we're really hoping, is just that they beat the number."
