Elon Musk claims that the media are biased against Tesla Motors and are basically in bed with the Big Oil. He slams his critics for publishing fake news, while various media outlets strike back, accusing him of incompetence and even claim that Musk promotes a website linked to a sex cult.
For years Elon Musk has been the epitome of “renewable”, “sustainable” and “equitable” capitalism. However, the essence of his success is nothing more than media hype. But the hype is fading and media is turning on Musk, threatening to undo his success story.
Since its IPO in 2001 Tesla Motors has been a media darling and a Wall Street favorite, despite the fact that the company’s financial state can be described as horrendous. Tesla is burning cash instead of fuel, and it has six consecutive losing quarters. Wall Street analysts and financial journalists are rarely willing to give the benefit of the doubt to companies that are consistently unprofitable.
However, for a long time Elon Musk’s company was the exception to the rule, mainly because investors and the media love a good story, and Musk sure knows how to weave a compelling narrative. A less charitable explanation would be that the media deftly exploited Musk’s storytelling for its own gain. Good stories bring clicks, clicks bring advertising, advertising is the lifeblood of the media. However, in its quest for clicks and advertising revenue, the financial media helped create a company with a $57 billion market cap that is wholly dependent on media hype.
That’s neither a metaphor, nor an exaggeration. Consider the following quote from the email Elon Mosk recently sent to Tesla employees before firing 9% of the company workforce: “Given that Tesla has never made an annual profit in the almost 15 years since we have existed, profit is obviously not what motivates us. What drives us is our mission to accelerate the world’s transition to sustainable, clean energy, but we will never achieve that mission unless we eventually demonstrate that we can be sustainably profitable. That is a valid and fair criticism of Tesla’s history to date.”
Wall Street never subsidizes a losing business, unless there is a very compelling story that can fool enough investors into believing that their patience with a money burning company will be richly rewarded in the future.
Sadly for Musk, the hype is fading and the financial publications have discovered that negative stories about Tesla generate just as many or even more clicks and advertising revenue than the positive stories. When negative articles started to pop up all over the Internet, Musk went full conspiracy theorist and came up with a theory that explains why he has suddenly become the target of a vicious media onslaught.
First, Tesla CEO slammed be media companies for their alleged hypocrisy:
“The holier-than-thou hypocrisy of big media companies who lay claim to the truth, but publish only enough to sugarcoat the lie, is why the public no longer respects them”, he claimed in a tweet. Then he went on to add that his media critics are basically pandering to their Big Oil advertisers:
Problem is journos are under constant pressure to get max clicks & earn advertising dollars or get fired. Tricky situation, as Tesla doesn’t advertise, but fossil fuel companies & gas/diesel car companies are among world’s biggest advertisers.
— Elon Musk (@elonmusk) May 23, 2018
Musk’s dissatisfaction with the mainstream media inspired a new business idea: a crowdsourced site where users could rate the truthfulness of various news outlets. It is safe to say that the mainstream press took the troll bait hook, line and sinker. Instead of calmly explaining that Tesla CEO is trying to find a convenient scapegoat for his entrepreneurial failures, some journalists decided to initiate a veritable smear campaign against Musk.
Maybe, they felt genuinely threatened by his plan to create a “crowdsourced Yelp for media companies”, but it’s still no excuse for headlines like Newsweek’s “Elon Musk Goes to War with the Media, Promotes Site with Alleged Sex Cult Ties” or Slate’s “Elon Musk’s Crusade for Media Accountability Lasted Three Whole Days Before He Recommended a News Site Affiliated With a Suspected Sex Cult“. That’s not journalism, that’s clickbait, even if the articles themselves contain no factual inaccuracies.
Tesla CEO indeed used his twitter account to promote an article published by The Knife of Aristotle, a site affiliated with NXIVM, a sex cult whose leader Keith Raniere is facing charges for “crimes ranging from forcing his followers to have sex with him all the way to literally having them branded.”
It may seem paradoxical, but for Musk it is preferable that the media stay focused on his misuse of twitter instead of focusing on his serious flaws as a tech entrepreneur.
According to several major Wall Street banks, Tesla will need to raise additional capital soon. Bad press can kill any hope of a successful capital raise.
Musk’s critics from the media can pick from a long list of topics that can be exploited in order to ruin the company’s reputation: Tesla’s much touted autopilot is a literal serial killer, because it kills Tesla drivers, while the company refuses to properly acknowledge and fix the problem. Tesla’s workers are often treated in ways reminiscent of a Dickens novel.
Elon Musk’s way of trading the company stock for his own account reminds market professionals of well known market manipulation schemes.
1/ Here is an explainer of what is happening with TSLA and why and how.
-Elon has to pump the stock up to $360+ so that several $billion of outstanding convertible debt can convert into common. No choice as he does not have the cash. Why not raise it?… https://t.co/L6ZkfZ4yZp
— Josh Wolfe (@wolfejosh) June 14, 2018
Unless Musk somehow performs a financial miracle and Tesla becomes profitable, chances are that he will lose his most important battle. He definitely picked the wrong fight. Unless you’re Trump, you can’t beat the omnipotent and omnipresent mainstream media.