Elon Musk is receiving considerable criticism because of recent behavior.
The increased scrutiny started around the time of the last Tesla (TSLA, Financial) earnings call when he referred to financial questions by analysts as boring. Most recently he called one of the divers, who risked his life helping to rescue the 12 Thai soccer boys, a "pedo" on Twitter. He did later remove the ill-advised tweet. The stock seems to react to Musk’s behavior, which is why further context should be added to the discussion.
A while ago when I read some unusual comments by Musk I got curious enough to collect pieces of unprepared speech and fed them into IBM’s Watson demo that can give you personality insights.
Watson delivers its insight by scoring text inputs based on the big five personality traits. Elon Musk’s profile came out, as I expected, with some very extreme scores. Now, don’t read this as an exact graph of Musk’s personality. But use it to your advantage, bull or bear, to interpret his behavior:
Musk is widely regarded as a visionary. A creative genius. We see that reflected by his unusual high scores in openness and low score on agreeableness. A high score on openness means a person is likely to have a preference to be engaged in a variety of activities (how many companies is this guy working on again?) instead of being locked into routines. Usually a person with a high score on this trait is intellectually curious and has a preference for novelty (as if electric vehicles aren’t novel enough there’s Space-X). Often truly creative people score high on openness.
To become regarded as a visionary it is very helpful to score high on openness but also helpful to score low on agreeableness. From Wikipedia: "Low agreeableness personalities are often competitive or challenging people, which can be seen as argumentative or untrustworthy."
Combined with his extraversion score, it may also mean he’s more likely to be cynical and wary of others (though that doesn’t justify his tweet by a mile). You are less likely to care what others think or to be slowed down by consideration for other people. This probably plays a role in the high turnover at Tesla. Musk scored very high on this trait, but it’s not unusual for CEOs to score low.
His disagreeableness combined with his high score on the emotional range (usually called neuroticism) help explain Musk’s less-than-ideal reactions to tweets. He may have a tendency to feel angry and have difficulty dealing with stress, especially under pressure.
Musk’s personality trait scores do not suggest he is a good or bad CEO. They are somewhat typical of a CEO running an innovative company. CEOs running mature stalwarts tend to show slightly different profiles. His scores are quite extreme as are his reputation and achievements.
It’s possible the stress of the Model 3 assembly line situation, which Musk called "the most excruciatingly hellish several months that I have ever had," had an effect.
If we combine that with a review of a few key financial metrics like Tesla's long-term debt:
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And the large capital requirements it still has. It's assembling Model 3s in a tent and reportedly plans to expand into China. Revenue isn't accelerating fast enough just yet.
It makes sense for Musk to be stressed out
My point is Musk's recent behavior is sometimes characterized as him "losing it," meaning he is going crazy. I don't think he's going crazy. His behavior seems extreme but a momentary product of his personality and current degree of pressure. Don't sell Tesla's stock because you think Musk went insane.
I have no position but presently favor the short side over the long side.
Disclosure: No positions.
