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Published on January 27th, 2019 | by Zachary Shahan

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That Time 1 Huge Tesla Shareholder Got Spooked & Sold 7% Of Tesla — CleanTechnica Exclusive

January 27th, 2019 by  


A long time ago, in a land far, far away, Tesla Motors was a baby. (It would later change its name to Tesla, but that’s another story.) Being a young baby, tiny little Tesla was not valued as highly as it is today. It was worth relatively little to outsiders, nothing close to its market cap of $51 billion today.

In fact, little Tesla had a lot of challenges, didn’t have Big Auto parents to help it out, and was barely learning to walk. Many automotive and startup experts presumed that it had no chance of survival. Before long, there was even a death watch ticking for the skinny, poor, inexperienced Silicon Valley native.

Nonetheless, some investors saw a sparkle in Tesla’s eye, had heard fables of an electric automaker from California that would one day help save the world, and did what they could to funnel some cash the company’s way to help it survive and grow. Of course, some of these financial supporters offered their help in private, not wanting to be spotted putting their faith and money into such a pre-pubescent baby.

I once upon a time learned about a specific country that had decided to act as a major benefactor to Tesla Motors. I’m not sure what led them to do so (perhaps I will get the chance to ask someday), but I did receive an interesting anecdote about how they left that role and disappeared from the baby company’s life.

The thing is, among any other potential motives, this benefactor surely intended to make a solid return on his investment. While it was a wild card investment, the dream was surely that young Tesla Motors would grow to be strong and mighty one day, and would then return the cash many times over.

This is where I’ll leave my metaphor (which is at least personally entertaining) and cut to sober, straightforward reality.

 

 

The story I was told by an extremely reliable source who I’m certain was telling the truth is that this shareholder, which owned approximately 7% of Tesla’s shares at that point in time, got spooked by an email from Elon Musk.

My source was laughing while telling me this. Apparently, Elon Musk sent an update to investors telling them to hold onto their shares for the next 24–36 months. The message, which was sent around the time Tesla Motors stock was between $30 and $40, was reportedly that the coming 2 or 3 years would be tough but it would it be worth holding onto the stock. (The stock price is now around $300, in case you don’t follow that side of the company.)

Despite the words of confidence about the future, this major shareholder got spooked by the letter and bailed. Actually, the way I understood the story, the assurance that things should turn out well alongside a request to hold tight and have faith was a giant red flag for such an investor.

In fact, according to the information I’ve gathered (from multiple sources close to the matter), this shareholder unloaded all of their shares of Tesla Motors right after receiving the company update from Elon.

Aside from the entertainment aspect of this story, I think there are a couple of interesting takeaway points here.

One point that has been an important one in my mind for years is that Elon Musk is exceedingly transparent and honest. Being a transparent person inherently myself and also highly valuing honesty, this is something I’ve long appreciated. One instance of Elon’s honesty that stands out to me is a time when he told a major media outlet on camera that Tesla’s stock price seemed a bit high for what Tesla had actually achieved. Find me another CEO who would say such a thing. (This, again, was years ago when the price was much, much lower than it is today.) This note to shareholders years ago is another instance of Elon preferring honesty over a misleading sales pitch that perhaps wouldn’t have led to one shareholder unloading 7% of the company.

Another highlight of this anecdote for me is that, when Elon Musk says, “hold tight through this period of turbulence — things should turn out well in the end,” it is perhaps a good idea to have some faith in the dude and in his long-term vision and analysis.

It’s no secret that Musk is a big dreamer. When Gigafactory 1 had its official opening in July 2016, I took a step back to admire not simply the impressive size and scale of the factory. What I primarily focused on was his willingness and enthusiasm to dream, and then to put everything he could into achieving dreams he thought were worthwhile. Many of us dream but then don’t try to achieve those dreams. A smaller number of people dream and then jump into the clouds without a solid — or solid enough — plan. It is quite uncommon, from my experiences, to find someone who dreams up gigantic castles of human achievement, tries to turn those dreams into life, and actually has the resources and skill to do so.

I can understand thinking that it’s time to bail when a company doesn’t even have a mass-produced car on the market and is dreaming about gigafactories, robotaxis, and production of millions of vehicles a year. It’s actually quite crazy to think about how much faith several big-time investors did have in these dreams. We were covering them enthusiastically on CleanTechnica, but it’s another thing to put millions or billions of dollars on the line.

The simple takeaways of this story in a nutshell (for me at least) are that it’s worthwhile trusting that Elon Musk is an honest dude, taking the long view along with him, and understanding that you sometimes have to go through challenges and even disappointment on the way to building a better tomorrow.

Naturally, none of this is investment advice. I own stock in Tesla and have done so for years because I believe in Tesla’s mission and likelihood of success — and the critical importance of its success for all of humanity. Though, I have no hard feelings for people who don’t feel comfortable putting their money into Tesla [TSLA].

By the way, for an interesting deep dive into Tesla’s history, take a look at this September 2010 report from Tesla. Also check out other articles in our Tesla Flashbacks series.

Lastly, I’ll take an opportunity here to note: If you would like to cut pollution and go electric by buying a Tesla, feel free to use my referral code — http://ts.la/tomasz7234 — to get 6 months of free Supercharging (or 9 months if you don’t bother to test drive the car).

Just be sure to use the code and order a car before February 1 to get that bonus. (Note: I jointly own a Model S with a couple of other guys, but we only get one referral code. That’s why the name on the referral code page is Tomasz rather than Zachary.)

 
 





 

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About the Author

Zach is tryin' to help society help itself (and other species). He spends most of his time here on CleanTechnica as its director and chief editor. He's also the president of Important Media and the director/founder of EV Obsession and Solar Love. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, and Canada. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in. But he offers no professional investment advice and would rather not be responsible for you losing money, so don't jump to conclusions.



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