By CCN: NYU Professor Scott Galloway presciently predicted Amazon’s acquisition of Whole Foods in 2017. He’s back., and now the professor reportedly believes that Tesla is in the crosshairs of being acquired as investor frustration mounts, saying in a recent podcast:
“My prediction is within 12 months Tesla is sub $100 per share and it probably gets acquired because there’s real value there.”
Professor Galloway reportedly also wonders if tech giants would want to take part in such a razor-thin business model:
“The guys that could acquire it that have the balance sheet are the tech companies, but they don’t want to go into a low-margin business. So would Google start to see the car as a platform for more advertising, maybe?”
It is no secret how badly Tesla’s stock has been performing this year. A lower share price brings with it the rising possibility that Elon Musk’s electric vehicle company may become a target. Such an outcome would be fantastic for Tesla’s longevity but terrible for its brand.
With nearly 27 million followers on Twitter, Elon Musk is an extraordinarily high-profile CEO. In a world of Tim Cook’s, he’s certainly a breath of fresh air. What resonates the most with his supporters is the “against all odds” persona that Tesla exudes.
Musk loves to talk about his naysayers in the early days of electric vehicles. Should Apple (which has shown interest in Tesla before) or another tech leviathan purchase Tesla, it would be tough to hold onto this persona. As Telsa burns through an alarming amount of cash, there are some extraordinarily bearish analyst predictions for TSLA stock. Clearly, some believe there is a non-negligible risk that Musk’s gung-ho, growth-at-all-costs approach is going to end badly. What Google or Apple would bring to Tesla would be a sizeable amount of liquidity and a significantly more stable back office structure.
Yes, Tesla is an incredible brand with a cult-like following, but would that survive a corporate whitewash? Perhaps it doesn’t matter. Elon Musk had the best-selling car in North America, and they still couldn’t even get close to making a profit. A restructuring might be the only way to get the companies debt load off life support.
When you think of a global brand that makes exclusively beautiful products, you probably think of Tesla or Apple. In this sense, the two companies appear to fit together perfectly. Apple has the cash to burn, and Tesla loves burning it. Tim Cook could provide the ruthless efficiency and Elon Musk the fairy dust. But would it be that easy?
When Audi bought Lamborghini, it was a great corporate move. German efficiency met with one of the sexiest Italian super-car manufacturers. Despite the commercial success, modern Lambo’s don’t have the soul of the old cars, with their rough edges and knee shattering gearboxes. Thus Lamborghini’s brand doesn’t have the mystique it once did.
Potential Tesla buyer beware: Elon Musk’s magic is his ability to play the pied piper to an army of die-hard fans. Lose their love at your peril.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN Markets.
This post was last modified on 28/05/2019 20:02