Elon Musk Isn’t Wrong About the Public Markets

If Elon Musk takes his electric car company and goes home, investors will be poorer for it.

Tesla Inc.’s colorful co-founder and CEO tweeted on Tuesday that he’s considering taking it private after complaining for years about life atop a public company. As Bloomberg News recalled on Tuesday, Musk expressed “his frustrations with having taken Tesla public” in an interview in January 2015 and has carped about the market several times since then.

Hours after the tweet, Musk laid out his beef with public markets in an email to Tesla employees. The gist is that 1) the volatility of Tesla’s stock is a distraction; 2) the scrutiny around quarterly earnings creates pressure to focus on short-term results at the expense of longer-term ones; and 3) short-sellers, or those who bet against the company, have an incentive to attack it.

My colleague Matt Levine rightly points out that Musk, “who is constantly tweeting attacks on journalists and jokes about bankruptcy, who is also busy running two other companies,” isn’t the best-suited critic of the market’s shortcomings. But don’t confuse the message with the messenger. Regardless of your opinion of Musk or the wisdom of taking Tesla private, with the number of companies listed on U.S. stock exchanges down to roughly 3,600 at the end of 2017 from more than 7,600 in 1997, it’s a good time to ask whether public markets are working the way they should.

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