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facebook and tesla

Tesla and Facebook – 2 Cases of Founder-Operated Companies Under Scrutiny

Tesla and Facebook are two well-known founder-led companies. Both companies have visionary founders of our generations and are icons of the information technology industry. Nonetheless both companies have gone through a turbulent 2018.

Tesla and Elon Musk is getting into trouble with Elon Musk’s tweets. Elon Musk has previously tweeted that a possible privatisation of Tesla at $420 a share. In which the stock market reacted accordingly.

SEC has since taken action with Elon Musk and sued him which has now resulted in his removal from Tesla as Chairman. Elon Musk will however remain at Tesla as CEO.

Facebook on the other hand had to deal with the Cambridge Analytica scandal, reduced growth guidance and the recent data breach.

Both companies are founder-led companies which has always been a bonus to shareholders as the stake of the founders are at stake as well. Therefore, they would want the company to do well too. As retail shareholders, standing alongside companies run by founders who has a huge stake is always a huge bonus.

Don’t bet against the founders

In the stock market, there are always a lot of news and noise. It can really be difficult to differentiate between the news and noise. Especially when you have to decipher these news/noise and integrate them with your investment analysis.

Therefore, as the market swings up and down, it is always wise to not bet against the founder.

After Elon Musk’s tweets which turned out to be more of a tweet in just than any other thing, there has been no indication that there will be any clear indication that there will be any privatisation at $420.

With data from Insider Arbitrate with information submitted to SEC by Tesla, between the tweet by Elon Musk on 8th August, and the announcement that Tesla will stay public on 24th August, there was no insider trades at all.

Tesla and Facebook - 2 Cases of Founder-led Companies - Tesla Insider Transactions 2018

Prior to that, most of the trades by insiders are option exercises and sales. No indication that there will be any hoarding of shares in anticipation of any privatisation at $420.

As for Facebook, prior to the Cambridge Analytica announcement, Mark Zuckerberg has sold his shares, which kicked up a mini furore. Same source, let’s take a look at Facebook’s insiders trade for 2018.

Tesla and Facebook - 2 Cases of Founder-led Companies - Facebook Insider Transactions 2018 (1)Tesla and Facebook - 2 Cases of Founder-led Companies - Facebook Insider Transactions 2018 (2)Tesla and Facebook - 2 Cases of Founder-led Companies - Facebook Insider Transactions 2018 (3)

The list hasn’t ended.

Tesla and Facebook - 2 Cases of Founder-led Companies - Facebook Insider Transactions 2018 (4)

Tesla and Facebook - 2 Cases of Founder-led Companies - Facebook Insider Transactions 2018 (5)

My reaction by now. Yawn!!!

Tesla and Facebook - 2 Cases of Founder-led Companies - Facebook Insider Transactions 2018 (6)

OK!!!! ENOUGH!!! Morale of the story, the sales goes on all the way for 2018.

I have been intrigued as to why the sales continues. What intrigued me was that, why did the sale continue even after the Cambridge Analytica scandal?

Well, my guess is that Facebook could really have faced a whole lot of issues this year. Or maybe Mark Zuckerberg is really poor this year.

One can argue that Mark Zuckerberg has been selling his shares since last year, however, 63% of all his sales occurred this year. And the remaining 29% of his sales occurred in 2017. Meaning to say, most of his sales has occurred within this 2 years?

 

Founder-Owned Companies

Whatever it is, I will not like to bet against the founders in the long run, instead, it is always good to stand by them.

There can be a tons of reasons for founders to sell their shares. Reasons that has nothing to do with the fundamentals of their company. Maybe, they wanted to buy a house, or maybe they are getting married or maybe their child is going to college. All legitimate reasons to stop hoarding their shares and start liquidating them to utilise the cash.

Both companies are currently facing scrutiny due to their public media releases, Elon Musk’s public tweet and Mark Zuckerberg’s constant sales and not so timely release of information of Facebook’s breach to the public. Both face different forms of challenges, nonetheless, insider’s transactions are always a good thing to look out for as an indicator to differentiate news and noise.

A friend of ITP, Kelvestor.com, has recently compiled an excellent list of Founder-operated companies listed on the SGX which includes 800 Super Holdings Limited that we previously covered. Similarly, Kelvestor.com believes in investing in Founder-operated companies as these companies provides many support to our investment thesis. Click here to take a look at his compilation and comment if you want to know more about the merits of Founder-operated companies or if you wish to share your opinion on this topic. Click here to follow Kelvestor.com on Facebook. Solid content coming your way.

By the way, we also wrote an article on Singtel Share Price800 Super Share PriceFuture of ESR-REIT and Viva Industrial Trust (VIT) if you are looking to invest to make passive income.

Investment in Singapore for Beginners

Chloe Lin, the founder of Invest Travel Play (ITP), was featured on Singapore national papers 联合早报 (Lian He Zao Ba) on 22 Aug 2018, which she actually shared a simple strategy to help readers to start investing safely with just $360 and building up your passive income in Singapore!

sean seah chloe zaobao

If you are looking for investment in Singapore for beginners, and are interested in learning how to make money safely and consistently from the stock market, check out Stock Investing and Options Made Easy Workshop and it’s Skillfuture credit claimable. It is a 2-day workshop that teaches students how to perform fundamental analysis on stocks and ultimately, decided whether to invest in certain stocks. Moreover, the course will also be teaching options strategy, a derivative which combines investing and options to increase your return on investment. 

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