After a tweeted spat that made headlines in the days leading up to the holiday weekend, Ross Gerber said Elon Musk entered an online Twitter Spaces discussion Gerber was having with 66,000 Tesla shareholders and spent an hour answering questions about his role at both companies, now and in the future.
“It went super well,” said Gerber, CEO of Santa Monica-based Gerber Kawasaki Wealth Management and often an activist investor in public companies, on Thursday night after the virtual event.
“He answered all my questions about what he’s doing at Twitter and when he’s coming back to Tesla. It was an incredibly illuminating hour, and it was great that he was willing to come in with the Tesla shareholders and provide this information,” he said. “One thing he said was he won’t be selling any more Tesla stock.”
For Gerber, it was mission accomplished.
The kerfuffle between Musk and Gerber began Dec. 16 when Gerber, a longtime fan of Tesla (he owns two of the company's cars), tweeted that he was going to run for a seat on the company’s board of directors and followed that up on Dec. 20 with another tweet about the drop in Tesla’s stock price, blaming the board for its failure to get Musk’s attention after his acquisition of Twitter. “Time for a shake up,” he tweeted.
Musk bought Twitter in October and has since been focused on its management, resulting in the firing of roughly half of its 7,500 employees and the resignation of about 1,200 more. At the same time, Musk has sold $40 billion in Tesla stock in 2022 to the frustration of Tesla investors, according to Reuters.
In response to Gerber's tweet, Musk tweeted a request for Gerber’s “great ideas” and told him to “go back and read your old Securities Analysis 101 textbook.”
Gerber came back with a tweeted photo of himself reading a Securities 101 textbook. “Was up all night reading. Still came up with #tesla worth $300 IMO $tsla”
Radio silence followed until Gerber’s Twitter Spaces shareholder event.
“What a day,” Gerber tweeted after. “Got my three questions answered. 1. Elon will find a new CEO of twitter and he has not lost focus on Tesla 2. Elon is extremely confident about the team at Tesla. 3. Elon is not selling any more Tesla stock.”
According to Larry Roth, the founder and managing partner of New York-based RLR Strategic Partners who has sat on boards and run public companies in financial services for more than 30 years, Gerber’s frustration, subsequent bid and eventual cool-off in the conflict with Musk is an example of what might prompt an advisor to run for a board seat and the good that can come out of it.
“One area where investment advisors can help a public company is in helping the board and the CEO explain strategy,” Roth said. “Professional investors can help the company grow and communicate in a way that will help support the stock price.”
Gerber agreed, saying that his experience with media, communications and finance offer Tesla something its board needs: skills that shareholders appreciate.
“They don’t have a great media team. The board needs to be able to communicate directly to shareholders and the public,” he said. “The board didn’t feel compelled to create certainty for shareholders, something I could do in an hour on Spaces. They don’t feel any need to communicate to the media. People are calling me because no one at Tesla will call them back.”
Advisors On Boards
In general, Roth said a high-quality, savvy investor whose interests are aligned with other shareholders can have a positive impact on the business, usually by helping the management team.
But the tweetstorm?
“It’s not the standard stuff we do,” he said.
Instead, requirements by the SEC for committees on compensation, strategy, governance and risk are all areas where an interested advisor can lend a hand.
“If you want to contribute in a constructive way, there’s not just the board, but these committees,” Roth said. “I sit on a couple of public boards and a few private boards. I’m interested not just as a fiduciary at a board level, but to return profit to shareholders.”
However, while this outside input can be helpful to a company, “it can’t fix what’s broken,” Roth said.
“With a strong-minded shareholder, if he/she doesn’t want to take advice, they don’t have to,” he said. “And if Elon doesn’t want Ross on the board, it’s not going to happen.”
Besides Musk’s acceptance of Gerber’s taking a seat on the board, the investment advisor will have quite a few logistical hoops to jump through in order to eliminate conflicts of interest that might arise, he said.
“As soon as I tweeted that I was going to do it, my lawyers were calling me saying I run an ETF, I manage money for other people, and there are loads of conflicts. So how am I going to be on a board?” Gerber said. “None of these conflicts are a deterrent in that I can make the changes I’ll need to make if I have to. My main goal was getting answers because the board of directors wasn’t getting answers. Perception is reality. If you tweet about Twitter all day long, people think you’re not working for Tesla.”
Now that he has those answers, Gerber said he’s taking his time figuring out how to get on the proxy and overcoming some of the barriers to taking a board seat.
Navigating Personalities
As for his relationship with Elon Musk, Gerber said he’d always been a fan of Tesla and his abilities.
“Many of my clients are investors in Tesla, I know many Tesla owners, and I’m big in the Tesla community,” he said. “We’re a force that Elon has to talk to and care about because we’re his people.”
Gerber said that when he started out in financial services, he found that one of the client demographics he worked best with were “difficult people.”
“You can be the biggest dick on earth, and it doesn’t bother me. Look at Dave Portnoy, we fought for a year,” he said of a YouTube argument he had with the popular sports and culture blogger in 2020 and 2021. “Super-difficult people don’t bother me, so I work with them. I have to treat them with respect, but I don’t need to back down.”
Bringing that people skill to Tesla could be beneficial to the company, he said, and it’s already been beneficial to Gerber Kawasaki Wealth Management, which has more than $2.2 billion in assets under management.
“I never thought I’d be a famous financial advisor, but right now it’s insane in my world. I can’t go anywhere,” Gerber said, adding that there’s been a significant uptick in new clients since the Twitter spat started. “Many people who work for me were not thrilled with the controversy even though our business is growing like crazy because of it.”
For now, this cooling period is welcome, he said.
“I was super-stoked that Elon even responded to my tweet, but when he came to talk to us, he legitimized me as an equal and took his time in answering all my questions,” Gerber said. “Now that he’s done that, a lot of the pressure is off the situation.”