Elon Musk gave Bill Gates advance warning on Tuesday to stay away from him. The Microsoft co-founder faces annihilation if he makes any further attempts to bet against Tesla.
That’s because Musk believes he will have transformed the automaker into a $30 trillion AI colossus once Tesla completes its pivot from primarily selling EVs to operating a profitable fleet of robot taxis. and humanoid robots.
“As soon as Tesla fully resolves autonomy and has [its droid] Optimus on volume production, anyone still holding a short position will be wiped out,” he posted on social media on Tuesday. “Gates too.”
😂
Once Tesla fully resolves autonomy and has Optimus in volume production, anyone still holding a short position will be gone. Even Gates.
— Elon Musk (@elonmusk) July 2, 2024
The pair’s rivalry became public after an exchange was revealed in 2022 showing that the world’s richest entrepreneur had refused to support Gates’ charity work after learning that the latter still had half a billion dollars in a bet that the stock price of Tesla would fall.
“Sorry, but I can’t take your climate change philanthropy seriously when you have a short position against Tesla, the company doing the most to solve climate change,” Musk wrote in undated text messages.
By the time those messages leaked, Gates was already regretting his bullish call on Tesla. It is unclear if he still has a position in the stock and he could not be reached wealth for comment.
Musk’s warning that the shorts will be “hidden” is still a bold claim for someone whose company had been the worst-performing name in the S&P 500 this year.
Tesla vehicle sales are down 6.6% during the first half of the year; His Cybertruck has struggled to live up to his lofty expectations; and he finally buried Tesla’s goal of increasing volumes from 1.8 million EVs last year to 20 million by 2030.
Musk has been building the floor under the stock since April
But Musk is not one to back down in the face of adversity, and he has sent other famous Tesla shorts such as David Einhorn and Jim Chanos, who made a fortune betting against Lehman Brothers and Enron, respectively.
In fact, Tesla’s CEO has been on a comeback since he put a floor under the stock in April.
First, he teased the unveiling of a new “CyberCab” robo-taxi model, hinting that it will finally tackle autonomy. He then announced that 2025 could see a return to growth in electric vehicle sales with new low-cost models, marking the end of the stock.
Tesla Robotaxi is revealed on 8/8
— Elon Musk (@elonmusk) April 5, 2024
Persistent concerns that the totemic CEO might resign from the company entirely due to the loss of his 2018 compensation deal — now worth $70 billion at the current stock price — were put to bed last month when the second investor the largest, Vanguard, joined others to support him.
Finally, Tesla revealed on Tuesday that it had avoided an even bigger drop in vehicle sales in the second quarter by liquidating excess inventory. Shutting down electric vehicle production to the lowest level since the third quarter of 2022 meant it had spare batteries it could now put into its stationary energy storage business, more than doubling in volume its already record Q1 at an unheard of 9.4 gigawatt-hours set. .
Tesla has now added $100 billion in market cap in the space of the last two days.
It’s trading at 70 times next year’s earnings, a huge multiple even for a growth stock, let alone one whose revenue and earnings in 2024—the most watched period—are projected to shrink.
However, if you’re one of those investors who believes Musk will do for robot servants what he did for EVs, it’s a small thing.
In his mind, there will be a robot not only in every business or every home, but for everyone – from babies to the elderly.
Therefore, he predicts demand at 1 billion droids per year, with Tesla conservatively controlling a tenth of the global market.
Is Tesla worth a third of the world’s current combined GDP?
He would sell these Optimus robots, which are currently still in the early prototype stage, at a price of $20,000 each, although the production costs per unit will only come to $10,000, leaving him a margin of 50% per robot.
Total annual earnings in that scenario would reach $1 trillion, which, together with a fairly standard earnings multiple of 25, gives a market cap of $25 trillion.
Add in the $5 trillion in robo-taxi fleets once launched, and you’re talking about real value for investors buying into the current market cap of $740 billion.
The problem with this kind of back-of-the-envelope math is that Musk’s assumptions can be off by orders of magnitude.
Musk predicts that the unit market volume is much closer to demand for the smartphone, which doesn’t even cost the $20,000 he predicts. Cars are a better representative here, and they tend to top out at 100 million new vehicles a year, partly because of their much higher price tag.
Chanos, for example, argued that Musk’s latest forecast means Tesla would have a market capitalization equivalent to nearly a third of the world’s total annual economic output.
So 30% of global GDP…? How funny. Good. $TSLA https://t.co/KBysHiVDTR
— Diogenes (@WallStCynic) June 13, 2024
Take, for example, his calculation of Tesla’s now-defunct annual volume target for 2030. Most companies with serious targets do a bottom-up macroeconomic analysis of their markets and projected demand over time for the product categories in which they compete.
By comparison, Musk put his sales figure at 20 million EVs, an amount greater than the world’s two biggest carmakers combined, by taking the global installed fleet of 2 billion cars already on the road and throwing out the guesswork. that Tesla can replace 1% of that. every year.
No wonder it was buried long before 2030.
If Musk can’t produce solid numbers this time to back up his claims, perhaps Gates will take him up on his bet.