You probably have read that Tesla has problems. The problems relate to Tesla’s inability to execute on its promises to deliver its Model 3 car as promised. And its stock is getting hammered.
But this is not just about screwing up on the Model 3. Tesla’s stock price is based on trust — not performance. Buyers of Tesla trust that Elon Musk will figure out a way to make Tesla profitable. The stock price assumes this will happen. And it is not happening.
That would be ok if Musk could figure out a way to keep investors believing. But for one reason or another, Musk appears not up to that challenge. He is doing a lot of stuff — perhaps too much stuff — but he is not wowing Wall Street about Tesla.
The bigger problem here is that Tesla is not alone. There are quite a few companies that have stock valuations largely based on their claims to be disruptive rather than their current performance. And there is a worry that if Tesla crashes, confidence in these companies may start to crack.
In other words, folks selling disruption will have to promise they will make money too.