• December 5, 2022

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Have you seen the prices lately of Elon Musk’s Tesla stock and Mark Zuckerberg’s META stock? They’re both in serious decline, a different kind of condition for their investors who’d been used to the stuff going up all the time. What has happened to the magic of these 2 CEOs formerly celebrated almost ceaselessly in the financial media?

It’s the condition known as “billionaire egomania.” This is where they’re so used to being immortalized that they become immune to the truth. No one around them is willing to risk losing favor by letting them know what a bad idea they’ve come up with. So, they go ahead a make the stupid mistake.

A wise, experienced chief executive officer might think ahead and have someone — maybe just one person — whose mission is simply to say “No, dummy, that’s the worst idea you’ve ever had and here’s why…” It’s hard though to call Elon and Mark “wise and experienced” even as they’ve banked billions.

Let’s start with Elon Musk. Bringing “start-up” leadership mentality (”I’ll do whatever I want to including breaking everything!”) to a mature company like Twitter is more than just a serious mistake. It’s a complete misunderstanding of what’s required. This disastrous approach is bound to be studied in business schools as a example of what not to do in this situation.

The South African-born emerald mining heir (aka “rich kid”) came in with “Half of you are fired and the other half must show complete loyalty to me!” This is equivalent to “the beatings will continue until morale improves,” an approach to business that generally leads to failure and disaster. “Commit to hardcore!” Are you kidding?

What happened to showing real leadership by inspiring your workers? Elon Musk is not up to it. How would that benefit his ego? And no one around him has the guts to tell him how bad it is and what a public relations nightmare he’s created for himself and Twitter. Egomania wins and the world gets a ruined social media giant.

With major advertisers abandoning the site, how will interest payments be met on the $13 billion in loans Musk had taken on for his purchase? Will he be dipping into his own billionaire wallet or what? It’s unlikely that the silly $8/month for the silly blue check mark will cover it.

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Also, there’s the strangeness: what was he thinking? Why not show up and leave it as it since it’s already successful? Did Musk have some other non-business agenda in mind? You have to wonder.

Meantime, his other project, the car company, continues to slide in price:

That’s down another 8% this week and now the 50-day moving average is turning downward. Tesla is tesing the early 2021 lows, it that support fails to hold, the selling could pick up even further.

Now what about Mark Zuckerberg? Well, it’s a slightly different version of billionaire egomania but the cause and effects are similar. He comes up with an awful idea — “everyone will be just crazy about buying Meta goggles!” — and since he’s had such spectacular success with Facebook, no one mentions what a bad idea this really is.

A very few people might be interested in the concept but did Mark conduct market research before getting started? Did no one around him make the suggestion that perhaps the market is lacking for this? No, everyone wants to keep the high paying gigs at the site and Facebook become Meta for the wrong reasons.

At least Zuckerberg says “I got this wrong and I take responsibility for that” as he announces major layoffs of employees. This is another one that will be taught at business schools for years as an example of the billionaire CEO’s ego losing track and the reluctance of those around him to check it.

Here’s the Meta weekly price chart:

It’s broken down below the 139 support level, on exceptionally heavy volume, from the March, 2020 pandemic-crisis selling.

Investors would be wise to carefully assess those times when the billionaire CEO has a new “vision” and wants to go for it in their own fashion, however cockamamie it may seem.

Not investment advice. For educational purposes only.

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