Venture capitalist defends Tesla and Elon Musk, issues bold takedown on TSLA skeptics

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There are a lot of reasons why Tesla (NASDAQ:TSLA) is fighting an uphill battle. The company is changing the status quo in the driving marketplace that is emerging and in both the automobile industry. Its CEO, Elon Musk, has been be a polarizing figure for many. These, together with the numbers of short-sellers betting on the firm ’s failure, makes Tesla a dramatic inventory and this became evident in the wake of the firm ’s first quarter results and earnings call.

Venture capitalist Chamath Palihapitiya, an early investor in Facebook who is estimated to be worth around $1.2 billion now, believes that many are missing the entire point about Tesla. In a segment with CNBC Halftime Report sponsor Scott Wapner, Palihapitiya explained why he supports Tesla, its vehicles such as the Model 3, and its CEO, Elon Musk. A video of the venture capitalist’s segment has been cut from CNBC’s uploads of this interview, though copies of the footage have been saved by a few members of the Tesla community since it aired (charge to @TradrFloridaFIL for supplying the video and transcription of this interview). 

Palihapitiya starts by asserting that Elon Musk has already finished endeavors that will benefit humanity for a long time to come, mentioning the reusable rockets of SpaceX, which have brought the prices of spaceflight down appreciably. The venture capitalist notes that Tesla is maturing under all the demand for its vehicles the Model 3, which has brought the company closer than ever to the market. While Palihapitiya admits that Tesla isn’t best-suited for investors who are particular with precision, he argues that the company has yet impressed on the long run.

The venture capitalist also voiced his criticism of Tesla skeptics, mainly hedge funds, who are adept at under-hyping and “sniping” the electric automobile maker. This is something that has weighed down the company over the quarters, and has caused CEO Elon Musk to react to critics online. “What it’s controlled by are a whole lot of hedge funds and venture . If you look at for example the Twitter traffic or if you look at the forum traffic around Tesla the quantity of hyping or under-hyping the amount of sniping is enormous. All that signals that it is a market that is from the creators and the executives’ control and firmly in the hands of financial manipulators,” Palihapitiya said.  


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While Palihapitiya admits that Elon Musk has a problem with his overly-aggressive timeframes, the venture capitalist candidly said that the world may be better off if Elon Musk were just allowed to do his job. ” “If you take a step back and say what is he guaranteed in 2014 you’d be ecstatic. Similarly, if you say from 2019 to 2024 and take a step back let the man do his job, will we be better or worse off as a world, as a species, as humankind, as customers? Will we be better off? ” he said.

A particular point of criticism for Elon Musk lies in his behavior online. Musk’s Twitter accounts could be thought of among Tesla’s greatest assets or liabilities, in the way that its contents have triggered both positive and negative swings for TSLA stock. Tesla critics currently view Musk’s Twitter antics as a critical part of their bear thesis since his activities are not reflective of a CEO that’s professional and in control. This was brought up by the CNBC host during the venture capitalist’s interview, and Palihapitiya was quick to issue a rebuttal. According to the billionaire, people that are caught up in concerns about Musk’s Twitter are currently missing the point considering the CEO’s now-infamous “financing secured” tweet.

“Okay, perhaps he stepped out of bounds. My point is that you ’re getting caught up in the window. I’m focusing on the primary course. The course is on the table. The choice for you as a buyer or a seller of that stock is, would you like to eat it? He might mistweet from time to time if you get caught up in all the stuff around the edges. My point is, who cares? Your job as a investor is to separate the news and the facts in the noise and the fiction. And that stuff all doesn’t matter. It doesn’t change the fact that tens of thousands of customers are buying that car quicker than they can get their hands on it. It doesn’t change the minute you sit inside that vehicle, your definition of what is expected is changed forever and you wonder why every other car around you that you ever step in that you might buy doesn’t have the very same things that car offers. So at the end of the day, if you like his style or not, his stuff is incontrovertible.  

Tesla’s Fremont mill, where all Model 3s are produced. (Photo: Tesla)

In response to this CNBC host’s question about the upcoming competition from auto, the venture capitalist notes at this point, it is evident that Tesla will be the “clear winner” in the electric vehicle industry. This comment isn’t only blind support for Tesla, as even premium electric cars being produced by legacy auto today still fall short of their specs and capabilities of their firm ’s vehicles. Vehicles such as the Audi e-tron, for instance, feature more luxurious interior finishes than a Tesla Model 3, but the vehicles are years behind, when it comes to software and efficiency. Palihapitiya argues that if Tesla reaches a point where it will need to be bailed out, larger companies like Apple or Google will likely acquire the electric automobile maker.

“You’re right because I remember all the Zune media players I bought after Apple introduced the iPod. I also remember the number of smartphones that are amazing I bought when the iPhone was like… It’s not exactly what people do. You know it will be the case that when expectations are redefined by you and you have a category leader, and you’ve got a mark that people recognize, the most easy decision and an indelible brand. Allow me to go with it and be somewhat pejorative; the decision is to pick the winner. And in this case there’s a clear winner in electrification, it’s done. That die has been cast. So now the question is can he build the infrastructure to supply the demand? And if given time and if given patience I believe he will and I vote he can do that.

“And everyone that bets against him may do this as well but at what stake because it’s not as if there s no protection for your inventory. The men and women who short this company are so short-sighted because the amount of companies that would come out of the woodwork… You don’t believe that Apple with 200 billion dollars of money backstops this organization and has a opportunity to enter a trillion dollar market instantly by buying that business if it gets imperiled in any way? Google which already tried to buy it wouldn’t try to buy it again? What exactly are we betting against? We re because we don ’ t like this betting against the cleaner world? We like to suck in the fumes and the carbon monoxide from all these cars? We re betting because we don ’ t like this against beautiful flat displays ways in which to manage your experience? ” he said.

Finally, Palihapitiya argues that the bets against Tesla are usually bets against Elon Musk’s fashion . When the CNBC host brought up Jim Chanos and his stance the venture capitalist didn’t mince his words. “Jim Chanos makes money once a decade. And while the market rips up money bleeds, and he s never on CNBC and each time something works he s there for five minutes. Great for Jim Chanos, fantastic as a hedge in a portfolio where you have 1% in a finance but the reality is being long equities makes sense. Getting long innovation is reasonable. Betting against entrepreneurs that are changing the world has never been a rewarding endeavor. Why start now? ” he said, adding that he is going to be happy to post his returns against Chanos’ fund any time when challenged by the CNBC host.

Watch Chamath Palihapitiya’s segment on CNBC’s Halftime Report in the video below.

The article Venture capitalist defends Tesla and Elon Musk, problems daring takedown on TSLA skeptics appeared first on TESLARATI.

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