- Ross Gerber thinks Tesla’s myriad problems aren’t going away anytime soon.
- The longtime investor said the company’s latest earnings results were “garbage.”
- Tesla will likely keep struggling unless Elon Musk addresses his reputational crisis, he said on Thursday.
Ross Gerber sees no silver lining in Tesla’s dismal second-quarter earnings.
The longtime Tesla investor said he believed that the carmaker’s problems aren’t going away anytime soon. Speaking to Yahoo! Finance after Tesla’s latest earnings report, Gerber said he still sees key problems inside the company — the largest one being Elon Musk’s public relations crisis.
Until Musk addresses his reputation, which has soured among some consumers amid his foray into politics this year, it’ll likely be hard for Tesla to keep growing, Gerber said. He added that he believes Musk’s disappearance from the public eye for at least a year could give the carmaker a boost.
“Until somebody wants to address that Elon’s political, not just opinions, but his actual behavior in public, is just super inappropriate and turns off basically everybody now. Like, at what point is anybody going to address the elephant in the room, which is Elon?” Gerber said. “And so maybe in a year things get better. But if he doesn’t change the way he’s acting, I don’t see how anything gets better.”
Tesla’s sales have plunged around the world, stoked partly by Musk’s erratic behavior on social media and his entanglement in politics.
The company's auto revenue dropped to $16.6 billion in the last quarter, a 16% decline from the same quarter the prior year. Total revenue came in at $22.4 billion, a 12% decline that marked the steepest quarterly drop in at least a decade.
"I mean, it's garbage," Gerber said of Tesla's latest results, adding that the company's decline in a growing industry was "sad and depressing."
Gerber said he believes Tesla's finances could continue to deteriorate, with capex likely going up in the near-term while revenue remains stagnant.
Gerber added that he believes Tesla needs to roll out its lower-cost model if it is going to be competitive globally. Musk has been teasing out a lower-cost Tesla for years.
"There's no doubt in my mind that if sales are going to improve, it's going to have to come from a new model that's lower-priced," Gerber said.
At the moment, Tesla looks like it's mired in a "crisis," he added.
"And that's actually when Elon works the best. Sadly, it takes a horrible crisis to get the best out of Elon, and so maybe we'll get that this time. You know, I don't know how many, you know, rabbits he can pull out of a hat, but I wouldn't bet against Elon," he said.
Gerber's investment firm has been regularly shedding its stake in the carmaker for years. Gerber Kawasaki Wealth and Investment Management sold another 26,000 shares of Tesla, or around 10% of the firm's stake in the first quarter, according to its latest 13F filing.