Source : THE AGE NEWS
Since Robyn Denholm became chair of the hyper polarising Tesla in 2018, the Aussie executive has applied one consistent rule: sell your Tesla stock ASAP.
That has ensured she has made $US530 million ($820 million) selling the Tesla shares gifted to her since she took the hot seat after Musk was forced to eject over plans to take the group private.
Robyn Denholm is tasked with keeping Elon Musk in line at Tesla.Credit:
She has not been the only insider selling stock. Multimillion-dollar share sales have also recently been transacted by Tesla’s chief financial officer, Vaibhav Taneja, and other board members such as Ira Ehrenpreis, and Musk’s brother, Kimbal.
Another board member, Rupert Murdoch’s estranged billionaire son James Murdoch, dumped $US13 million worth of stock in March.
But their sales paled into insignificance compared with Denholm’s, and the astounding thing is – her sales spree could have been much higher.
She was among the current and former Tesla board members who were forced to settle a shareholder lawsuit over their extraordinary pay as the value of low-priced share options soared along with the stock. It meant they received enormous compensation for what many see as a role that involves no more than rubber-stamping Musk’s wishes.
The legal settlement meant Denholm had to forfeit options this week worth $US110 million.
The only question is, should other Tesla shareholders who actually paid hard cash for their shares follow her lead and sell?
Let’s start with a different question: why is this respected Silicon Valley veteran selling?
Who would not want to own shares in a company that – as its return to the trillion-dollar valuation club demonstrates – seems to be protected from any sense of economic logic.
Sales continued to plunge across its biggest European markets last month, despite a long-awaited update of its most popular car.
Its trillion-dollar valuation only makes sense if you look at it as a meme stock – a company that suddenly goes viral on social media and its shares skyrocket for no clear reason.
While leaving Tesla on self-drive mode, Musk found time to support extreme right-wing causes across Europe, which triggered a plunge in sales on the Continent, as well as the Trump administration, which is waging a global trade war that is also costing Tesla dearly.
And when reports emerged that Tesla’s directors were searching for a potential replacement for Musk – a very sensible decision for any board in the circumstances – Denholm made a public statement declaring the report to be “absolutely false” and made it clear that Tesla and its founder Musk were joined at the hip.
A protester stands outside a Tesla showroom in West London.Credit: Getty Images
“The CEO of Tesla is Elon Musk and the board is highly confident in his ability to continue executing on the exciting growth plan ahead,” she said in a tweet on his social media platform, X.
It is no wonder this board was slammed by a US court judge over a $US56 billion pay packet for Musk. It was accused of acting as enabler for the company founder, not as an overseer for investors.
But the rules are different at Tesla.
Its trillion-dollar valuation only makes sense if you look at it as a meme stock – a company that suddenly goes viral on social media and its shares skyrocket for no clear reason. And Musk is its meme. Denholm seems to get this.
Any valuation currently subscribed to Tesla left reality a long time ago, and the only tether with valuations on planet Earth is its mercurial founder.
Tesla’s valuation was extraordinary enough when it was merely worth more than every other carmaker on the planet combined. That was based on the idea that it had too much of a lead on e-vehicles – the car of the future – for anyone else to catch it.
While US and European sales reflect repugnance for Musk’s politics, the fall-off in China reflects a far more sobering reality: Tesla is way behind its multitude of Chinese rivals on every significant feature: price, recharging times and autonomous driving features which are now offered free on some Chinese cars.
The Nio EP9 on display at the Guangzhou Auto Show in China late last year. China is taking the lead on e-vehicle development.Credit: Bloomberg
Keep in mind that the future earnings that underpin its current $US1.1 trillion valuation are expected to shrink if his Republican buddies successfully gut electric vehicle subsidies to the tune of billions of dollars. And the price investors pay for each dollar of Tesla’s profit far exceeds dominant tech rivals such as Nvidia, Apple and Microsoft.
Cars clearly don’t drive its valuation now, it is the market perception of Musk’s ability to morph the company into a dominant force in AI, robotaxis and humanoid robots.
That is a much harder argument to make in the current environment.
Any valuation currently subscribed to Tesla left reality a long time ago, and the only tether with valuations on planet Earth is its mercurial founder.
You don’t need to go outside the US borders to see what significant competition Tesla faces on the AI front. And China appears to be streets ahead when it comes to autonomous driving, robotaxis and is already talking about AI-aided robots as its next workforce.
It underlines that Denholm’s one job at Tesla is to keep Musk interested enough to ensure he gives the company a decent crack at the impossible task before it.
The issue is not whether Tesla is a valuable company, it is whether it is worth anything remotely close to the current market valuation.
It gives an interesting context to Denholm’s massive stock sale, which has left her with shares worth about $US27 million.
James Murdoch, the younger son of Rupert, is another high-profile shareholder who has sold millions of dollars worth of Tesla stocks.Credit: Bloomberg
Her Tesla stake is almost certainly worth less than her trophy homes in Sydney and nearby Whale Beach where she reportedly tried, and failed, to get approval for a lift to be installed that would deliver her to the sun-kissed sand.
If she isn’t willing to hold shares she paid almost nothing for, other investors should take heed.
And you only need to look at Musk’s focus to see why. His trip to the Middle East with Trump yielded the news that Saudi Arabia had authorised the use of SpaceX’s Starlink satellite communications service.
Unlike e-vehicles, robotaxis, AI and dancing robots, Musk’s SpaceX totally dominates the space sector with thousands of low orbit, cost-efficient, satellites.
Unlike Tesla, SpaceX is also privately owned and considered the future of his considerable wealth.
