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Wall Street to Tesla's Elon Musk: Get Help



As Tesla struggles with the setback of its startling and rapid withdrawal proposal to fight privately some investors are asking what was unthinkable before: is it time to remove Founder Elon Musk from CEO spot?

Shareholders who have supported Musk's eccentricities in the past are not happy with the implications of the ill-conceived plan. Tesla on Tuesday was hit with a sixth shareholder suit over Musk's tweets. And the Securities and Exchange Commission is investigating, a process that could take years.

Cowen and Co. analysts said Monday they had hoped that recent events would inspire Tesla's board of directors to "[bring] a more operational CEO." James Albertin of Consumer Edge Research told CNBC that Musk's behavior has produced a "side show" that detracts from Tesla's real achievements. "He's clearly too thin," Albertin said.

"I acknowledge that the industry [car] has moved towards electrification in a way that would not have been possible without Tesla," said CFRA analyst Efraim Levy. "But there is also neuroticism, the unfiltered part."

In this respect, Musk resembles many founder CEOs. While entrepreneurs can well imagine new products and make them a reality, they are less effective in the capitalist dictates of corporate governance. Musk is often hostile to analysts and journalists, seems to tweet before he thinks, and displays a shocking openness in media profiles. He currently appears to be the opposite of an effective corporate leader.

His actions have even drawn comparisons with Uber founder Travis Kalanick, who had also courted controversy and was replaced by Dara Khosrowshahi last year.

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"Founder Attachment, over-trusted, and naivete may be necessary to start new ventures, but these emotions will cause problems later," economics professor Noam Wasserman wrote in the Harvard Business Review , His 2008 study found that more than 75 percent of the founders were there When the Tesla company passed from the technology's innovation to mass-market vehicle shipments, this moment could be near.

The key question is whether [Tesla] investors will continue to support a CEO who may be involved in market manipulation and / or securities fraud, as well as a company being investigated by the SEC, "wrote Cowen analysts Musks A series of tweets raises the question "whether Elson's behavior, management style and operational ability are sufficient to take Tesla to the next level," said the note.

The Musk Mystique

Still the concept of being Musk Tesla's board of directors reaffirmed its support for the CEO in a statement, and no replacement seems to be in the starting blocks, although Musk's contract with Tesla allows him to step down as CEO while continuing to be involved in the product, Analysts agree that it would look awful.

"Anything that interferes with Elon's involvement in the company would lure the retail investor because it violates the mystique of the company, "said Cowan analyst Jeffrey Osborne. CFRA's Levy, who lowered Tesla's key interest rate this week, said he expects Musk's CEO to remain "called by investors for TSLA's and Elon Musk's unique support."

However, what many are asking for is Musk's No. 2: A chief operating officer or operative leader who could steer Tesla and free Musk to focus on big-picture strategies. Musk has such a leader at SpaceX in the form of the company's president and COO, Gwynne Shotwell. A counterpart in Tesla would relieve Musk something.

But a question of how long a COO last could endure Musk's famous micromanager style and hard-driving, factory-dormant tendencies.

"For me, it would be like being a chief of staff in the Trump White House," said CFRA Levy. "It does not have the full power that normally comes with the position."

Tesla's board has said that it fully supports Musk and told the Washington Post that it is not actively seeking a day surgeon. Wall Street seems to agree that any movement on this front should come from Musk itself – and there was no active movement on that front.

In the meantime, Musk will not miss to get advice relieve the pressure. Wellness guru Arianna Huffington recently urged him to sleep more . Musk countered that working less than his 120-hour week is not an option.

CFRA's Levy had a simpler proposal: "Tweet less."


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