Tesla Motors Inc.: Tesla Stock and Its Hollywood Connection

Tesla StockHollywood Stars Drive Tesla Cars and Invest in Tesla Stock

Tesla Motors Inc. (NASDAQ:TSLA) has been dropping over the past few days, but that’s not a bad thing. Tesla stock has been trading at improbable levels ever since the company went public in June 2010. Tesla shares are getting a dose of market realism, which is sadly absent from the Palo Alto company’s medicine cabinet. But don’t tell Hollywood that! Tesla stock has quite the following among otherwise independent thinking and generally “liberal” actors in the Hollywood set.

Morgan Freeman, the actor who soothed audiences while narrating the events of The Shawshank Redemption, happens to be a huge fan of Tesla Motors. And how ironic is that, considering Freeman played God in a film, while many adoring investors think Tesla founder Elon Musk is God in real life? (Source: Morgan Freeman is a Tesla (TSLA) investor and ‘huge fan’ of Elon Musk, Electrek, September 6, 2016.)

Hollywood and Even ‘God’ Love Tesla

Indeed, Freeman has also become a top fan of Musk—whose need for attention in Palo Alto rivals that of his Hollywood buddies 357 miles south—driving a Tesla car and investing in Tesla stock. Nobody should be surprised, therefore, that Brad Pitt and Angelina Jolie, darlings of the silver screen and silver-spoon philanthropy, are also Tesla “Model S” owners. (Source: Family time! Brad Pitt and Angelina Jolie grab groceries with kids Shiloh, Knox and Vivienne as they celebrate July 4 together in LA, The Daily Mail, July 16, 2016.)

Of course, there’s absolutely nothing wrong with Tesla Motors’ cars and there’s certainly nothing wrong with owning one or investing in the company. But there might be something riskier about the latter, as TSLA stock has been trading way too high for too long. How does trading at a -61.46 price-to-earnings (P/E) ratio hit you? And that’s just the 2016 number; the Tesla P/E ratio for 2018 is -137.97. Freeman might want to resume his role as God to help Musk achieve his goals, just as he did for Evan in Evan Almighty.

Hollywood Stars Seek Guidance; Have They Found it in Elon Musk?

One explanation for Tesla’s flock of fans in Hollywood is that many celebrities harbor a Noah complex. They don’t want to be Noah, but they want their own very prophet to follow. So many stars may consider themselves spiritual, but it helps when playing certain roles to not have too much faith. For example, the Tesla-driving Jolie, like many others of her generation and profession, has declared that she does not follow any particular faith, even though both her parents were devout Catholics (father Jon Voight even played Pope John Paul II in a TV biopic).

I find religious openness commendable, but in the wayward, directionless world that emerged from the collapse of communism, many have found it difficult to adjust. People are always in search of deeper meanings, of certainties. Given the job that actors do, assuming different personalities, they suffer from this need more than others. Moreover, actors are in the public eye; they rely on fans for success and must appear to be nice and responsible as a result. Today, environmentalism has become the new religion/political movement. If a celebrity preaches about protecting the planet, they get many likes on social media sites like Facebook.

Environmentalism, or at least the appearance of wanting to help the environment, is a tremendous driver of popularity in Hollywood, and Tesla stock’s zany valuation reflects this. Celebrities in Tesla cars are the best possible advertisement—short of having a polar bear drive one—for Tesla Motors and Tesla stock.

It’s No Longer Enough to Thrill Audiences with Jason Bourne

Actors like Matt Damon, who portrays CIA operative Jason Bourne on the big screen, must also be seen to have a cause. Damon has founded an association promoting access to water. Many of his colleagues, such as Meryl Streep, organize conferences. While not flying in his private jet or cruising on a yacht—powered by huge diesel engines—on the French Riviera, Oscar winner Leonardo DiCaprio is ever ready to denounce the threats of climate change.

As it happens, he drives a Tesla. So do Cameron Diaz, George Clooney, Steven Spielberg, James Cameron, and Seth Green.

Imagine you are an aspiring or comeback actor or director in Hollywood today.

You show up for the audition or meeting for a new big hit driving a 1960s Ferrari with four exhaust pipes emitting a symphonic roar, the sound of six twin-barrel carburetors bellowing as they suck air and gasoline. That’s a major faux pas in liberal Hollywood. If you want the part, you best be driving a Tesla, boy! In Hollywood, Tesla cars—and therefore, Tesla stock—are a publicity godsend. What more visible way is there to show off your environmentalist credentials than by driving a green car in car-mad California?

Tesla Stock Has a Deep and Existential Connection to Hollywood

Add to that the fact that Tesla Motors is tied with solar panels, courtesy of SolarCity Corporation (NASDAQ:SCTY), and you have the dream of green power generated from the sun, charging a home battery that then supplies power to your car. And voila! The persona of environmentalist do-gooder the self-serving Hollywood set loves to embody is served.

Tesla cars, yoga, and solar panels are to modern “green” Hollywood what Ferrari, Aston Martin, Lamborghini, martinis, jets, and villas on the beach were to the Hollywood of the 1960s. TSLA stock has gained so much of its value because of its association with the new Hollywood image, if not its ethos. The two thrive together.

If DiCaprio and Clooney suddenly decided that worrying about the climate is futile, given that it’s a natural and highly complex system, it would break the Tesla spell. Investors would finally start seeing Tesla Motors as a company instead of as a church or as the vessel for the Earth’s green and moral redemption. That realization would promptly cause TSLA shares to fall to their true value.

Without Hollywood, Tesla stock would suddenly be no more or less appealing than Ford Motor Company (NYSE:F) stock, General Motors Company (NYSE:GM) stock, or even Fiat Chrysler Automobiles NV (NYSE:FCAU) stock. Like the latter, Tesla shares would have to trade on their financial merit, or perception thereof, alone. To take Hollywood out of Tesla would be like taking God out of the Vatican.