Ross Gerber, a serious and vocal Tesla investor, says Elon Musk broke the Tesla stock when he sold it to purchase Twitter.
Gerber runs the Gerber Kawasaki ETF, and it had its January shareholder meeting yesterday.
The investor had to elucidate why the fund was down 32% during the last 12 months, and, unsurprisingly, he blamed it on the performance of Tesla’s stock, which the fund is heavily investing in.
But more specifically, Gerber blamed it on Elon Musk and the best way he sold Tesla stocks to finance his acquisition of Twitter:
Elon dumped $40 billion of Tesla stocks last 12 months – causing an enormous decline in Tesla stock price.
Musk has never directly acknowledged the impact of his selling and truly denied it being a big factor. He told Gerber to return to and skim textbooks from Finance 101 because he believed the decline in Tesla’s stock was simply on account of the broader stock market and FED initiatives.
The CEO eventually did promise to not sell more Tesla stocks for the subsequent few years. Nevertheless, he said that before and didn’t follow through.
Now Gerber more specifically accused Musk of destroying Tesla’s stock in the best way he sold the stock. He argues that Musk must have done a stock offering:
As a substitute, they were open market sales that were front-run by short sellers and a few of those happened in desperation in October and November when he needed money for Twitter when Twitter revenue went to zero. A number of those sales happened around $200 a share and he broke the stock. It went from $200 to $100.
Gerber says that the market can’t absorb $40 billion in open market sales and that the quantity sold was greater than most IPOs – hence why he argues those sales must have undergone an offering.
The investor concluded with putting the blame clearly on the Tesla board and Musk:
The board must have been throughout this process, but as a substitute, it was done at an enormous expense to shareholders and there’s no excuse. And I’m not okay with it.
Gerber has been pushing for a board seat amid this whole ordeal and claims that he plans to reign in Musk and get a confirmation in writing that he won’t sell more Tesla stocks in the identical way.
Electrek’s Take
Obviously, what we’re seeing here is someone who leads a fund and is trying to elucidate to his investors why they lost a variety of money during the last 12 months.
However the argument is sound to me.
There’s little doubt that Musk’s share sales were mismanaged and that that they had an enormous negative impact on Tesla’s stock during the last 12 months.
Now do I believe that Gerber would have the opportunity to avoid or limit Musk’s future potential negative impact on Tesla’s stock? I don’t know. I believe Musk is currently spending an excessive amount of time within the echo chamber he created for himself on Twitter where his views are getting reinforced by a military of sycophants searching for his approval.
That’s the larger problem that should be fixed if we would like Tesla, which I still view as an important company on the earth, to have a robust leader again.