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Last week, we discussed how the options market was preparing for the robotaxi event that Tesla (TSLA) hosted last night. We noted that there was a roughly even split between bulls and skeptics, with a slight bias toward skepticism. Aftert this morning’s downbeat reaction, it occurred to me that TSLA’s history can be divided into two eras at TSLA: BT (Before Twitter) and AX (After X). The performance difference is stark.
To put the dates into perspective, Elon Musk launched the acquisition of Twitter on April 14, 2022, and completed it on October 28th of that year. When the deal was announced, TSLA had just completed an absolutely astonishing run of success. The stock had increased by nearly 20-fold in the two and a half years prior to then. It was literally one of the best investments of all-time, far outpacing the Nasdaq 100 (NDX) and S&P 500 (SPX), making many of its adherents quite rich. The major benchmarks are barely visible in relation to TSLA in the chart below:
TSLA, 5-Years, Daily Candles with Vertical Lines at April 14th and October 28th, 2022; NDX (purple) SPX (blue)
Source: Interactive Brokers
Unfortunately, the stock has been dead money since the deal was consummated, and a loser since it was announced. The following normalized graphs show the distinctions:
TSLA, SPX, and NDX Normalized from October 14, 2019 through April 14, 2022
Source: Bloomberg
TSLA, SPX, and NDX Normalized from October 14, 2019 through October 28, 2022
Source: Bloomberg
TSLA, SPX, and NDX Normalized from April 14, 2022 through October 11, 2024
Source: Bloomberg
TSLA, SPX, and NDX Normalized from October 28, 2022 through October 11, 2024
Source: Bloomberg
Everyone can come up with their own theories for why this distinction arose. Perhaps the stock’s rise was simply unsustainable, but that seems simplistic. My theory is that Twitter/X may have become one company too many for this phenomenal entrepreneur to manage.
It is extraordinarily difficult to manage any company, let alone a company that has changed transportation, and let alone other companies that have transformed spaceflight and telecommunications. But there is a common theme around transportation that binds SpaceX, Starlink, and TSLA together thematically. A social media company is a whole different animal – and a distracting one at that.
Anyone who has spent too much time on social media understands that it can be true time waster. Now imagine trying to manage a multitude of complex companies while spending increased amounts of time on social media without having it affect your performance. It seems impossible, and it very well might be.
And of course, while everyone is free to offer their personal opinions about politics and social issues, there is a real concern that Musk alienated some of his core customers. Many of the early adopters of electric cars, with TSLA being the premier manufacturer of them, did so for environmental and social reasons. Yet some of those core customers became dismayed when Musk chose to offer political opinions that differed from theirs, just as other carmakers were rolling out worthy electric competitors. I know of several who sold or traded in their Teslas for that reason.
We can debate the themes — and I’m expecting a lively debate in the comments (please keep it civil!) – but the evidence seems clear. There are clearly two eras at TSLA, at least regarding its stock performance: BT and AX.
Related: The Robotaxi Revolution is Here!