Is Tesla CEO Elon Musk Losing His Mind?

It’s a simple question that’s bound to get some hate mail rolling in:

Is Tesla’s (NASDAQ: TSLA) beloved CEO, Elon Musk, on the verge of a mental breakdown?

I ask this in all sincerity and not to be provocative, but rather to address a legitimate concern for Tesla’s investors, many who are putting mountains of trust in just one man’s ability to execute.

Not since the era of Steve Jobs has a CEO been so important, so crucial, to a company’s ultimate success. If Elon, purely for the sake of this hypothetical, were to tragically have a heart attack and pass away tonight, one could only imagine how far Tesla’s stock would dip come morning.

Well, “dip” is probably the wrong word to use here. We all know the stock would crash, plummet, and fall off a cliff if Musk were to suddenly disappear overnight.

There’s no doubt that the market is putting enormous value on Musk as a leader. After all, Tesla’s board just authorized a 10-year compensation plan for Elon that, if its ambitious milestones are met, would net him $55.8 billion.

For perspective, that’s about as much as Tesla’s entire market cap today, which goes to show just how reliant the company and its shareholders are on Musk.

As CNBC aptly puts it: “The biggest risk that will determine Tesla’s fate [is] Elon Musk himself.”

Can Elon Keep it Together?

Questioning Musk’s mental health is probably going to get me lambasted by some of his fanboys, but it isn’t a concern that comes without merit. Over the summer, Elon actually questioned his own mental state when asked by a Twitter user whether or not he was bipolar:

Yeah. Maybe not medically tho. Dunno. Bad feelings correlate to bad events, so maybe real problem is getting carried away in what I sign up for. If you buy a ticket to hell, it isn’t fair to blame hell.

In another tweet that same day, Elon raised concerns about his ability to cope with the incredible stress that comes with running multiple high-profile companies and business ventures.

The reality is great highs, terrible lows and unrelenting stress. Don’t think people want to hear about the last two.

To be completely clear on this, Tesla’s CEO took to Twitter to muse about whether or not he’s suffering from an undiagnosed mental disorder and also to proclaim he’s living in a metaphorical hell. If a friend or relative approached you with those statements, wouldn’t you be at least a little concerned?

Well, what if that friend also told you he believes we’re living in a computer simulation and that “there’s a billion to one chance we’re living in base reality”?

Or if he randomly decided to start selling flamethrowers?

Or, after a recent break up with his girlfriend, he lamented:

I will never be happy without having someone. Going to sleep alone kills me. It’s not like I don’t know what that feels like: Being in a big empty house, and the footsteps echoing through the hallway, no one there — and no one on the pillow next to you. Fuck. How do you make yourself happy in a situation like that?

Well, that’s Elon Musk’s last year in a nutshell — a man who, while wildly successful in many respects, has become tormented with loneliness, mood swings, and enormous amounts of stress.

Personally, that’s not someone I want running a company I’m invested in.

Toeing the Line

I believe it’s Bruce Feirstein who gets credited for saying, “The line between genius and insanity is only measured by success.” To the extent this is true, Elon is certainly toeing the line, as his wildly prominent business ventures continue to operate deep in the red, propped up largely on investor confidence in his ability to execute.

This idea that Elon is teetering between genius and insanity was effectively inked on paper this month when he agreed to the 10-year compensation agreement mentioned earlier. Elon gets zero salary on the deal, with his entire payout tied to Tesla’s market cap… which many believe to be overvalued already.

Business Insider called the compensation agreement “delusional.”

What makes this compensation agreement especially bizarre is that less than a year ago, Elon publicly recognized Tesla’s stock was overpriced. Here’s a very clear-cut statement from Elon in May of last year when Tesla was trading a little over $50 billion:

I do believe this market cap is higher than we have any right to deserve… We’re a money losing company.

Yet today, Elon is committing himself to a compensation package that includes the ultimate milestone of Tesla reaching $650 billion in market value, more than 11 times the company’s current valuation.

No doubt this is an enormously ambitious target and one the market obviously doesn’t agree with quite yet. Perhaps Musk knows something we all don’t, or perhaps he’s just finally begun to drink his own Kool-Aid.

One thing that’s for certain, at least, is that Elon doesn’t have an easy road ahead of him. If the stress was getting to him before, one can only imagine how he’ll handle the pressure of having to take Tesla to $650 billion in a decade.

For Tesla to get there, the company is going to face an untold number of obstacles, but perhaps the most pressing right now is developing a growing supply chain of energy metals.

For Tesla to grow 11 times over the next decade, it needs miners of strategic energy metals to grow right along with it. The problem for Elon is that some of the metals used in Tesla’s batteries are in incredibly short supply.

In the case of cobalt, for instance, there’s only one late-phase primary cobalt project in North America right now. That obviously puts Tesla in a bit of a bind, but it also puts that miner in a very promising and potentially lucrative position.

For those of you who want to learn more about that opportunity, I encourage you to get the full details from my colleague Keith Kohl here.

Until next time,

Jason Stutman

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