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Elon Musk\u2019s connections to President Donald Trump could potentially damage the California billionaire\u2019s Tesla (NASDAQ:TSLA) brand, especially after the president\u2019s decision to temporarily halt refugees.<\/p>\n
Five Tesla customers have canceled their orders for the Model 3 over Musk\u2019s decision to accept invitations from Trump to sit on two of the president\u2019s advisory groups. The cancellations have raised concerns that Musk\u2019s brand could take a hit if the entrepreneur doesn\u2019t address customer concerns.<\/p>\n
Musk<\/a> needs to tread lightly when palling around with Trump, because most of wealthy Musk loyalists do not generally support the new White House occupant, COO Salome Gvarmia of the tech investment firm Devonshire Research Group (DRG), told The Daily Caller News Foundation.<\/p>\n \u201cMusk\u2019s followers are passionate for their cause, leading to the overwhelming support and brand strength for Tesla,\u201d she said. \u201cMusk\u2019s followers can be single-handedly credited for maintaining Tesla\u2019s share price at levels that are — based on any number of valuation metrics — egregiously high.\u201d<\/p>\n Gvarmia\u2019s comments come as a growing number of brand loyalists claim they are starting to reconsider making future Tesla purchases.<\/p>\n Jodie Eason, one of the Tesla owners who canceled her Model 3 order,\u00a0told BuzzFeed Tuesday that canceling her order was the only way to get through to Musk.<\/a><\/p>\n \u201c<\/strong>I feel that someone that wants to colonize Mars and who worries about the machine uprising should not be scared to voice opinions counter to the Trump administration,\u201d Eason said.<\/p>\n Another Tesla customer, Nate Erickson, paid his $1,000 deposit on the first day the electric car company began accepting reservations. He canceled his order after seeing how Musk initially reacted to Trump\u2019s executive orders.<\/p>\n \u201cI cannot support a company where the CEO is acting as a conduit to the rise of white nationalism,\u201d Erickson wrote in a box on the company\u2019s website, asking for comments. He also called Musk\u2019s ties to Trump \u201cabhorrent.\u201d<\/p>\n Musk\u2019s initial\u00a0tweet responding<\/a> to Trump\u2019s order clamping down on immigration went over like a lead balloon: \u201cthe blanket entry ban on citizens from certain primarily Muslim countries is not the best way to address the country\u2019s problems,\u201d Musk tweeted Jan. 28.<\/p>\n Musk received mostly negative feedback for failing to come out more directly against Trump\u2019s ban, so he tried a more direct attack in later tweets. But Musk\u2019s follow up tweets only further enraged his followers, reminding them of his connections to Trump.<\/p>\n Gvarmia, whose firm has extensively researched Tesla\u2019s intricate financial model, said Musk\u2019s connections to Trump could be perceived as a betrayal to those who think he is an advocate of progressive causes, like fighting global warming.<\/p>\n \u201cI would expect exactly the kind of outrage among his followers as we\u2019ve seen on social media,\u201d she told TheDCNF. \u201cUnless he manages this association very carefully, I believe it has the potential to be perceived as betrayal of shared values and snowball into a significant backlash from Tesla\u2019s devotees.\u201d<\/p>\n Tesla accepted a cascade of $1,000 deposits in 2016 for the pre-order of the Model 3, a vehicle that is slated to be built and delivered to customers later this year. And in return for the deposits, DRG reported in a memo last year<\/a>\u00a0(PDF), the electric company was able to use \u201chigh pre-orders to boost share price\u201d as well as issue new shares.<\/p>\n DRG warned at the time that Tesla, because of the exotic tools it uses to hide its financial stability, is \u201coperationally vulnerable to setbacks.\u201d<\/p>\n If several mishaps occur during the production stage of the Model 3, then those expecting a Model 3 in their driveway will likely be left high and dry by the time delivery of the car is scheduled.<\/p>\n One of the mishaps could very well be a trove of cancelled orders, one of the primary mechanisms keeping Tesla\u2019s financials afloat<\/p>\n At the core of Tesla\u2019s financial balancing act is an exotic scheme called Future-Earning Pyramidal Financing, wherein the company raises capital to cover future losses rather than future profitable returns, according to DRG.<\/p>\n The assumption behind the scheme is that future losses will be concealed by a second round of capital infusions, allowing some investors to bail with a profit, while other investors — perhaps lower on the totem poll — will have to cope with guaranteed losses.<\/p>\n Republished by permission. Original here<\/a>.<\/small><\/p>\n Tesla<\/a> Photo via Shutterstock<\/em> This article, “Are Elon Musk’s Ties to President Trump Damaging Tesla’s Brand?<\/a>” was first published on Small Business Trends<\/a><\/p>\n Are Elon Musk’s connections to Trump damaging the Tesla Brand? Maybe so, especially after the president’s decision to temporarily halt refugees.<\/p>\n","protected":false},"author":18,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[17,27],"tags":[],"class_list":["post-12776","post","type-post","status-publish","format-standard","hentry","category-economy","category-publisher-channel-content"],"_links":{"self":[{"href":"https:\/\/businessnewsbox.com\/index.php?rest_route=\/wp\/v2\/posts\/12776","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businessnewsbox.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businessnewsbox.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businessnewsbox.com\/index.php?rest_route=\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/businessnewsbox.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12776"}],"version-history":[{"count":0,"href":"https:\/\/businessnewsbox.com\/index.php?rest_route=\/wp\/v2\/posts\/12776\/revisions"}],"wp:attachment":[{"href":"https:\/\/businessnewsbox.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12776"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businessnewsbox.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12776"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businessnewsbox.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12776"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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