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If someone has left a government job with a black eye, is literally running a company with dwindling profits, and suddenly federal investigators start creeping over his business, you can say he’s having a bad year.
But most people aren’t Elon Musk,
The world’s richest man has become richer this year and his shareholders have also reduced. TeslaHis electric car company could make him even richer by approving a trillion-dollar pay package, the condition being that he succeeds with new plans for a “robot army” and other technological breakthroughs, even if some past promises remain unfulfilled.
“Elon Musk’s genius is keeping investors focused on what the company will look like in the next 5 or 10 years – while ignoring near-term challenges,” said Garrett Nelson of CFRA Research. Or to put it more bluntly, as Zacks Investment’s Brian Mulberry puts it, “Your average ceo Probably won’t be able to survive this.”
Musk started the year with a bit of a stir – promising to cut $2 trillion in government spending as president heads up donald trumpThe Department for Government Efficiency, before halving that pledge. In the end, DOGE recorded savings of only $240 billion, according to its own notoriously unreliable estimates, and it is also unclear whether these savings will be sustained as the Trump administration struggles to recoup many of the essential jobs DOGE has cut that it should not have.
“He has a pattern of announcing big-ticket dismissals, and then turning around and saying, ‘No, that’s a mistake,'” said Ellen Kamarck, a senior fellow at the Brookings Institute. “They cut without a plan, without any regard for the task.”
Musk adopted the same ‘cut and burn’ strategy after assuming power Twitter And evidence of that reversal has emerged this year too.
Over the past two months, he has settled a pair of lawsuits filed by 2,000 former Twitter employees and executives who alleged they were forced out under false pretenses or were never given severance as promised. The exact amount the ex-employees received has not been disclosed, but if they get even a fraction of the total $628 million they are seeking, it would significantly cut costs for a company whose advertising has fallen since their takeover.
More bad news for Musk came on Wednesday when Tesla announced that third-quarter earnings fell 37%. Vehicle sales rose 6% as customers rushed to take advantage of federal tax credits before they expire last month, but the full-year figure is expected to decline significantly as car buyers angered by Musk’s right-wing political stances boycott the business.
This time a year ago, Musk was telling investors that sales could increase by 20% to 30%.
The stock plunged earlier this year as bad news piled up. But since Musk appeared in the Oval Office to mark his departure from DOGE in May, it has doubled and is now up nearly 9% year-to-date after the close of regular trading on Wednesday. According to Forbes magazine, his net worth has also increased by $62 billion this year to $483 billion.
Investors are mostly buying Musk’s point that falling car sales no longer matter as the company’s future hinges on his new driverless robotaxis service, energy storage business and building robots for the home and factory. To make their job worthwhile, Tesla directors are asking shareholders to sign off on their huge new pay package at an annual meeting next month.
But there are big questions surrounding these efforts, especially driverless cabs.
Musk’s robotaxis, which began picking up passengers in Austin, Texas and San Francisco this summer, cannot yet be called driverless because they still need “safety monitors” ready to seize control if something goes wrong, which sometimes happens. For example, one of them drove in the opposing lane.
Robotaxi plans require approval from regulators in various states, even though regulators in Washington have cornered the company.
They have launched four investigations into Tesla so far this year, including one into why it did not immediately report accidents involving its self-driving software to the government as required. Another report launched earlier this month is examining dozens of crashes in which Teslas using self-driving software ran red lights and broke other traffic rules, sometimes crashing into other vehicles and causing injuries.
Musk has disappointed before, talking big and repeatedly missing deadlines, but ultimately delivering profits for shareholders. Tesla investors had a tough time in 2018 as the company struggled to make its Model 3 vehicle profitable, ultimately seeing their stock soar due to a surge in sales.
One money manager who weathered the first surge and then bought again earlier this year says he believes Musk’s magic still holds and he can do the seemingly impossible again.
“He often teeters on the edge of disaster, and then pulls back when the time comes,” Nancy Tengler said in a statement.
Now one difference is that most other Tesla investors also believe it and have bought the stock, leaving little room for error.
The value of shares of US companies in the S&P 500 index is 24 times more than what investors expect to earn next year. By contrast, Tesla is trading at 250 times expected profits, which is enough to convince you that Musk has had a great year rather than a very bad one.