Jan 7, 2023 - Economy

The Elon Musk personality cult lives strong

Photo illustration of Elon Musk.

Photo illustration: Shoshana Gordon/Axios. Photo: Christian Marquardt - Pool/Getty Images

Elon Musk is doing just fine. His stakes in SpaceX, Tesla, and other concerns have made him the second-richest man in the world. He owns a global social network of awesome power. He's procreating zealously.

Why it matters: Musk attained his current mesospheric heights in large part by leaning into a Great Man narrative that credited him not only with all of his past successes but also numerous wildly optimistic future ones.

  • That narrative, naturally, annoyed a lot of people who didn't much like Musk, or the narrative he was leaning into.
  • Those people have been positively gleeful for the past few months, as Musk was forced to buy Twitter, where ever-mounting chaos, combined with problems at Tesla, resulted in $200 billion being wiped off Musk's net worth.

Be smart: The smell emanating from the headlines this week has a name: Schadenfreude. Both Elon Musk and beleaguered would-be House speaker Kevin McCarthy accumulated enemies while gaining power. Those enemies are now thoroughly enjoying their precipitous decline in stature.

Between the lines: In the case of Musk, however, the decline of Tesla stock — and thereby of his net worth — is, truth be told, not quite as exceptional as the haters might wish, and certainly isn't some kind of once-in-a-century occurrence.

  • Tesla is down 73% from its high — more or less in line with Meta (fka Facebook), which is down 67%. It's significantly outperforming stocks like Zoom, which is down 89%, or Beyond Meat, which is down 95%.
  • Meanwhile, Musk's other big company, SpaceX, is holding firm to its valuation of around $140 billion.
  • In terms of valuation, Tesla is still trading at 34 times earnings, while Meta's P/E ratio is a mere 12. The number for Tesla's strongest competitor, Ford, is barely over 5.

The big picture: The Elon Musk personality cult lives on in Tesla's $350 billion valuation, which is broadly understood to be vastly too high by anybody who doesn't attribute a massive Musk premium to the company.

The bottom line: If Tesla's valuation at the end of 2021 made any logical sense, then the company's current valuation would represent a true humbling of Elon Musk. But it didn't, and it doesn't.

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