A prominent Tesla investor, Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, isn’t mincing words: Tesla’s Q2 earnings report was “garbage” and he sees “no hope” on the horizon.
According to Gerber, the electric automaker’s woes are far from over, and he maintains that the company’s biggest challenge remains CEO Elon Musk’s “PR crisis.”
In a recent interview, Gerber stated that Tesla’s growth could be hampered unless Musk addresses his damaged reputation— a consequence of his forays into politics this year, which have alienated some consumers.
Gerber added that he believes a boost for Tesla could come if Musk would simply step back from the public eye for at least a year.
“Unless someone is willing to confront the politics of Elon Musk—not just his opinions, but his actual behavior in public—which is just so inappropriate, and now basically everyone’s annoyed by him, when is someone going to confront the elephant in the room, which is Elon himself?” he questioned.
“So, maybe a year from now things will be better. But if he doesn’t change his behavior, I don’t see how it gets better,” he added.
Tesla’s global sales have taken a hit, partly attributed to Musk’s erratic social media conduct and increased political involvement this year. The company’s automotive revenue for the last quarter plummeted to $16.6 billion, a 16% decrease year-over-year. Total revenue reached $22.4 billion, a 12% year-over-year decline, marking its most significant quarterly drop in at least a decade.
“I mean, it’s garbage,” Gerber said about Tesla’s latest results, adding that the company’s slump in a growing industry is “sad and depressing.”
Furthermore, Gerber believes Tesla’s financial situation could continue to deteriorate, with capital expenditures likely to increase in the short term while revenues remain stagnant. He argues that Tesla needs to introduce lower-cost models to compete effectively on a global scale.
“There’s no question in my mind to improve sales, they have to have a cheaper car,” he added. “And right now, it looks like Tesla is in a crisis.”
On that note, Musk himself revealed during the earnings call that Tesla is on the cusp of launching its long-awaited affordable electric vehicle, which will be a new version of the Model Y. Tesla disclosed in its report that initial production of this model started in June, with mass production expected to commence in the second half of the year.
Finally, Gerber lamented, “The sad thing is, it probably takes a terrible crisis for Elon to be at his best, so maybe we’re getting there. You know, I don’t know how many rabbits he can pull out of a hat, but I wouldn’t bet against Elon.”
This isn’t the first time Gerber has sounded the alarm about Tesla’s future. Earlier this month, he cautioned that Tesla’s stock price could plummet by as much as 50% if the market re-evaluates Tesla’s valuation.
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