“Pied Piper”: the curious case of Elon Musk

May 23, 2021 12:37 AM AEST | By Furquan Moharkan

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“Pied Piper”: the curious case of Elon Musk — Image source: Bitcoin, Ethereum and Ripple coins - largest cryptocurrencies by market capitalisation. © Josefkubes

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Billionaire Elon Musk, the CEO of Tesla Inc (NYSE:TSLA), has a habit of staying in headlines – from his off-the-cuff tweets to ideas that seem irrational. This time, he is again in news, but a large section of people is angry at him, calling him “pied piper” of cryptocurrencies.

The anger seems justifiable. His U-turn on Bitcoin and calling Dogecoin a “hustle”, are said to have played a significant role in the crash of cryptocurrency prices in May 2020. Interestingly, the Tesla boss, earlier in 2020, was all praises for cryptocurrencies, leading to an unprecedented rally.

The reason Mr Musk cited for his backtracking on Bitcoin was that it wasn’t environmentally friendly. However, it is surprising that how could an influential figure, whose core business is electric vehicles – which are at forefront of eco-friendly shift – not know about the environmental hazards of the asset he is investing in.

This is not all. Tesla, the company that he heads, has price-to-earnings multiple of 487. This means that investors are paying US$487 for one dollar earned by the company that has four models in production right now – Model S, Model 3, Model X and Model Y. The P-E Multiple of Tesla is 10 times more that of S&P500.

However, controversies aren’t new to Mr Musk.

“Am considering taking Tesla private at $420. Funding secured. Shareholders could either sell at 420 (in US dollars) or hold shares & go private,” he tweeted on 7 August 2018.

At that time, the market price of Tesla’s shares stood at US$379.57 (pre-split price). His ‘shoot in the thin air’ tweet sent Tesla shares soaring 13% on the day. No doubt, it was followed by a punitive action by the Securities Exchange Commission, however, many critics allege that SEC has been soft on him. "I want to be clear, I do not respect the SEC," Mr Musk had once said in a TV interview in December 2018 – three months after SEC charged him with fraud.

Ironically, “420” it is associated with weed consumption.

(The opinions expressed in this blog are those of the author and they do not reflect the opinions or views of the organisation.)

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