That isn't a great reason to dump Tesla. A good reason to dump Tesla is that Ford and Toyota are poised to run them out of business. Between the fires and the "autopilot" crash issues and price and production delays, Tesla will end up going the way of the Delorian.
WHen the NY Auto Show rolled around this year I went straight to the Toyota booth to try out the BZX4 (What a stupid name now that I think about it)
This car is the supposed Tesla killer. Take it from me, it is not. The interior is claustrophobic reminiscent of early Nissan Leaf. If you are 6'2 or taller, you are going to have a bad time. Its clear that center console was not tested by any tall person. There is nothing appealing about this car in my opinion other than the Toyota badge. It is ugly inside and out. It is neither a bog standard car(which a lot of people want) nor a stunning looking EV(which a lot of people want). It is the standard mismash OEMs have created int he past. They always make EVs "weird" when they don't have to be. Sure this car is going to sell out whatever limited production they can make because demand for EVs far outstrips supply but Tesla killer it will not be.
For Ford I wonder about their cost structure. The teardown of their EVs indicate that they are still implementing old school thinking from the ICE world that adds unneeded cost to the sticker price. This is uncompetitive with Tesla long term. They need to really reform the organization and fast so their next gen EVs do better.
The F150 is the best selling vehicle in America. American's want an F150 the way it is today. They don't care about gross margins and doing it the most efficient way. And if they can get that F150 with a battery that saves them "oodles" in gas money, but delivers an otherwise same experience, you can bet your ass they will pay for it.
The F150 has its supporters but others can take the steps to cut their costs and as a result, make the F150 a harder sell when you have everything else as equal. I strongly believe the current demand for Lightning is partially due to scarcity of choice.
Just to be fair here, I believe dumping the stock of a company whose leader is acting so inexplicably that one can no longer be certain of his/her rationality is the right thing to do. I always say, no matter how much you have, it's tactless to throw away money. (Probably the more money you have, the more tactless and tone deaf the act of throwing away money becomes.)
All that said, in this case, as you point out, there are multiple reasons to be dumping stocks of companies owned or influenced by this guy. At least until we have a better handle on what's going on. If nothing's wrong, we can always buy it back. But right now, very few of the market's concerns have much to do with politics. He's acting in an unpredictable manner just when the market appears to be entering a period of uncertainty. It may be because of his politics, but the market doesn't care about the why. Rational people are looking for some level of safety, stability and security at the moment. Unpredictable leaders who appear bent on market manipulation fly in the face of that.
Delorean sold about 7,000 cars, total, in its existence. Tesla sold about a million last year. Regardless of how you feel about Tesla, it's safe to say it's now a major, fast-growing auto maker that's not going away.
This is actually bad investment strategy. Warren Buffet once made a shit load of money because of this.
During a more conservative time... waaay back. A company was doing very well but the CEO had an affair. The public caught wind of the affair and the stock tanked, because people had your exact same philosophy. Those people cared about the behavior of the CEO while ignoring the metrics of the company. Warren Buffet looked at the fundamental performance of the company and saw that it was doing quite well, so he bought it at super low prices.
Eventually the stock price changed and began to reflect the fundamentals of the actual business as people forgot about the behavior of the CEO.
You shouldn't care about his erratic behavior. You should care about the business sector and the overall performance of the company.
A CEO having an affair is probably different than a CEO with a sizable control of votimg shares, appearing to be pretty impulsive in general in public.
The CEO with the affair could presumably be replaced if romantic fidelity is important to the company or if the relationship violated company policies, but if it doesn't affect their business choices, maybe it's not needed.
A CEO with strong control is a lot harder to replace, and fighting over replacing such a CEO is likely to happen in public and be a negative for the company. General impulsiveness is, IMHO, more likely to show up in business choices than romantic impulsiveness (if that's what was the basis for the affair), and business choices made for impulsive reasons at the very least increases volitility and may likely reduce expected value. If I'm investing in an established company, I think I want stability and rational choices, not volatility and impulsive choices. But then, I don't invest in individual companies, apart from stock based compensation.
Interesting point, I suppose the affair didn’t affect the bottom line of the company, but Musk trying to buy twitter and considering how strongly his company’s brands are tied to his personal one are not something to be ignored. I believe they have a tangible effect on the value of the company. So in this case his behavior should be considered.
It has a tangible effect on the short term value of the company. Just like the affair. People all tend to have short term thinking. The price of the stock drops because of behavior, this is real... but it is also opportunity. While you sell, I buy. You lose out.
The underlying performance of the company does not change based off of random tweets. If Tesla is good enough to take over the entire automobile industry even the CEO pulling off his pants walking around in public is a separate issue to actual performance.
Doesn't your example support his/her position though? Dump the stock now, wait till the price drops, buy at a reduced price ... profit! I know, timing the market and all that, but this seems like a sensible move now.
I don't care about Mr. Musk's politics. But I dumped all of my Tesla stock recently because of his increasingly erratic behavior.
To me, it demonstrates an inability to make wise decisions. And I can't trust my money to people who can no longer reliably make wise decisions.
He's impulsive, and entertaining to watch; but now I will do so from a distance. And so will my money.