Musk and Zuckerberg swap roles and BlackRock and Temasek invest in decarbonization

Elon Musk had a fantastic week and Mark Zuckerberg saw two hundred billion in market cap evaporate as shareholders question his billion-dollar investments in AI. Costs are high and potential returns remain unclear as Meta AI, powered by its latest language model Llama 3, is offered free and open source.

The sentiment that returns are unclear was also often heard about investments in climate tech, yet the world’s largest investor BlackRock and Singaporean state investment fund Temasek are investing heavily in this crucial sector through a new fund: Decarbonization Partners.

Those considering investing in the rapidly developing sector of climate tech and decarbonization as well, I look forward to meeting you in May when I will be in the Netherlands and Singapore. Hit me up!

But first: the surprising week of Elon Musk and Mark Zuckerberg.

Musk wins despite gas pedal glue — yes, glue

It was, as is often the case in the tech sector, a tale of two extremes this week: Tesla soared, while Meta plunged. This is especially notable because Tesla shares had slipped to $138 after reaching an all-time high of $409, while Meta was one of the biggest risers in the stock market over the last year. What happened?

After the recall of all Tesla Cybertrucks sold due to possibly glued gas pedals and unclear stories about robotaxis were received with deafening silence from the investor side, Tesla almost hid this sentence at the bottom of page ten of its quarterly report:

“We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025.”

In other words, Tesla’s long-awaited Model 2, the cheapest Tesla ever, which is supposed to be Tesla’s version of the Volkswagen Golf, the car for the masses, comes to market earlier than expected. Immediately, TSLA shares jumped 12%.

Meanwhile, Musk’s intended opponent in a cage fight between what would have been the two palest fighters in the history of martial arts, Meta’s Mark Zuckerberg, had one of those moments when self confidence overrules common sense.

Zuckerberg punished for candor

During Meta’s quarterly earnings presentation, Zuckerberg let slip that it will take “a number of years” before investments in AI will translate into profits. Zuckerberg added truthfully that once Meta has found a revenue model, it will be very good at monetizing it.

Only nobody heard that part anymore, much like when a party runs out of drinks and snacks, then the sound system breaks down, but the host cheerily suggests that we all hold hands and sing. Result: a 16% collapse in Meta’s share price and a loss of two hundred billion dollars in market cap.

Meta lost as much as forty-five billion dollars since 2020 via its Reality Labs division on investments in smart glasses and not-yet-existing Metaverse business. No shareholder wants Zuckerberg to lose that kind of money on his investments in AI, while meanwhile the good ole’ ad business is doing spectacularly well: also because Chinese discounters Temu and Shein advertise for billions via Facebook and Instagram, ad revenue rose 27% to over $35 billion in the first quarter.

Shareholders think about today, investors think about tomorrow

Shareholders would rather grab dividends now than invest for the long term. Google owner Alphabet became worth two trillion dollars (two thousand billion) this week after it announced it would pay twenty cents per share in dividends and starts buying back its own shares for seventy billion dollars. This made Alphabet the fourth most valuable company in the world after Microsoft, Apple and Nvidia.

This ignored the fact that Google’s revenue growth, like Microsoft that presented outstanding quarterly numbers, was also driven by substantial growth (thirty percent) in cloud services, in which AI played a major role. So Google gets rewarded for largely following the same strategy as Meta, which got punished for it. Go figure.

Yet Google, like all other tech companies, should be valued more on long-term vision and making the right choices in the process. Cloud services, with nine billion in revenue, are almost seven times smaller than the advertising business (62 billion), because for too long there was not enough focus on cloud services and AI. Since then, Google has been playing catch-up.

Elon Musk is often ridiculed, sometimes rightly so, but anyone who looks a little longer at his activities has to admit that he possesses the rare combination of skills in being able to analyze the market correctly and subsequently position his own companies to capitalize.

It is no coincidence that Musk, despite the late start of his AI company xAI, OpenAI’s dominance with ChatGPT and Google’s strong competition with Gemini, managed to raise six billion dollars from investors for xAI. Just last weekend that was supposed to be three billion dollars at a valuation of $15 billion, but then potential investors received an email to this effect:

“We all received an email that basically said, ‘It’s now $6B on $18B, and don’t complain because a lot of other people want in.”

Now that is an email I would like to send around sometime, except with a happy smile emoticon at the end.

Elon Musk’s pitch for xAI boils down to the company’s ambition to connect the digital and physical worlds. Musk wants to do this by pulling training data for Grok, xAI’s first product, from each of his companies, including X (formerly Twitter), Tesla, SpaceX, his tunneling company Boring Company and Neuralink, which develops computer interfaces that can be implanted in the human brain. It’s a worldview that will generate a lot of resistance, but at least it shows long-term vision.

BlackRock and Temasek raise $1.4 billion for climate tech

Solving the world’s biggest challenge, climate change, also requires a long-term vision combined with a willingness to invest billions. The world’s largest investment firm BlackRock and Singaporean state investment fund Temasek have therefore raised $1.4 billion to invest in technologies that combat climate change.

Predictably, the Wall Street Journal, widely read by “ho-ho-not-so-fast-it-was-always-hot” investors, does not write about investments but about “wagers”: a term used in a casino when putting your chips on red or black.

Greenhushing as bad as greenwashing

Knowing that the capital market looks with suspicion at the results of risky investments in unproven projects, making more and more companies guilty of greenhushing rather than greenwashing, Decarbonization Partners rushes to say that it invests only in “late-stage, proven decarbonization technologies.”

It is unfortunate, yet understandable, that investing in startups is avoided because there is much need for capital for start-ups, for unproven companies; after all, how else will companies ever get to the stage of having proven themselves? It’s a bit like saying as a parent that you love your kids as soon as they can walk; but how they learn to walk, that’s something those kiddies have to figure out for themselves.

In total, more than thirty institutional investors from 18 countries have invested in the fund, including pension funds, sovereign wealth funds and family offices, and with $1.4 billion Decarbonization Partners has raised even four hundred million dollars more than it initially targeted.

Investments have already been made in seven companies developing various innovative decarbonization technologies, including low-carbon hydrogen producer Monolith that I wrote about last week, biotechnology company MycoWorks and electric battery material producer Group14. These are developments that are hopeful.

Carbon credit exchange in … Saudi Arabia

Other hopeful news that amidst all the stock market turmoil has been snowed under, a rare word in connection with Saudi Arabia, is that the world’s largest oil state will open a carbon credit trading exchange at the end of this year in partnership with market leader Xpansiv, which will provide the infrastructure for the exchange.

The announcement of a carbon credit exchange in this region resembles a chicken breeder announcing he is going vegan, but should be seen as part of Saudi Arabia’ s larger plan to move to a sustainable economy. It is looking more and more like the Saudis are serious about this, so it will be fascinating to follow what market share the new Saudi carbon credit exchange can capture in the global carbon credit market, which Morgan Stanley estimates to be worth $100 billion by 2030.

Finally: I’m in the Netherlands and Singapore in May

In closing, a personal note in the fifty-second edition of this newsletter. Looking back over last year, one notices that I write a lot about market developments and investments, whereas thirty years ago I actually started out as an entrepreneur in the tech industry, launching the first national wide available internet service provider in the Netherlands.

Because I am no longer running a business, which for me always resulted in running with blinders on toward a dot on the horizon, I have the opportunity to mentor various entrepreneurs and help them by investing when possible.

Since I started this newsletter, I have regularly received friendly invitations from readers to catch up on possible joint investing. I plan to do that next month; I’ll be in the Netherlands and Singapore in May. If you’re interested in hearing more about the projects I support, always focused on sustainability and a large international market, I’d love to hear from you. And I'd love to hear what you're working on.

Have a great Sunday and see you next week!