Tech

Without profit, Elon Musk’s coming back to earth

Last night, eccentric billionaire Elon Musk sent one of his own Tesla sports cars into outer space with the launch of the most powerful operational rocket the world has ever seen.

The swagger and showmanship of the event should not distract from the significance of the launch, or the fact that Musk is an immensely impressive entrepreneur.

From being in the vanguard of the electric car market to pushing the boundaries of futuristic infrastructure projects, such as Hyperloop, Musk is undoubtedly one of life’s pioneers. His most ambitious project, commercial space travel, has enjoyed technological success – along with the setbacks that accompany such complex ventures. Millions have watched his rockets launch and even land successfully on droneships in the Atlantic ocean.

Read more: Elon Musk's SpaceX is sending a rocket to Mars

This innovation has been driven by a private company with private investment following the closure of Nasa’s 30-year space shuttle program. Nasa plans to get back in the game with its own heavy-lift rockets but won’t be launching anything for three or four years, during which time Musk’s SpaceX program will continue to advance. Musk deserves respect for his vision and risk-taking, but while most of us can sit back and enjoy the show his investors have an altogether different perspective.

Elon Musk (Source: Getty)

Rocket launches may offer some distraction but shareholders’ patience is being tested by missed targets on the roll-out of the Tesla Model 3 car and, most significantly, the rate at which the company is burning through cash. Tonight Tesla will release its fourth-quarter earnings and analysts are expecting gloomy news on losses per share despite a 40 per cent increase in year-on-year revenue.

Musk has been tied to the company by a new long-term performance arrangement, engineered by investors who worry what would happen if he left the company. Some Tesla-watchers took reports of the new 10-year deal as a definite sell signal, but others retain faith in Musk’s ability to see his grand schemes through to profitability. Last summer, Musk surprised when he admitted his company’s share price was “higher than we have the right to deserve”.

Many would say the same today. The rockets are impressive, but they shouldn’t be in place of good old fashioned returns.

Read more: Elon Musk's now sold out of flamethrowers after peddling $10m worth of them

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