Elon Musk, the CEO of Tesla, has to deal with the displeasure of investors who are worried that he now seems much more concerned about Twitter, his new acquisition, than the electric car maker. Some Tesla investors are urging Musk to hand over the reins to one of his companies as the electric car company’s stock plummets. Tesla closed Wednesday at $156.80 a share, with a total valuation of less than $500 billion, down significantly from last spring, when Tesla was valued at more than $1 trillion.
Is Musk overworked or did he just make the wrong choice in acquiring Twitter this fall? As the head of four world-famous companies – Tesla, SpaceX, Neuralink and Twitter – the billionaire seems to have spent more time restructuring Twitter than running his other businesses. And that could very well lead to a fallout with investors from other companies, including Tesla. Musk bought Twitter for $44 billion in late October and has since spent his time looking for ways to make that investment profitable and repay his creditors in the deal.
Management of the social media company has taken up much of Musk’s schedule in recent weeks; he participated in several audio chats and tweeted photos of his work from the company’s headquarters in San Francisco. Now some Tesla investors are asking him to hand over the reins to one of his companies, claiming the billionaire is overworked and devoting less time to his role at the electric car maker. But still, Tesla has lost more than half of its stock market value since the Twitter/Musk saga began in early April 2022.
At the time of writing, Tesla’s market capitalization is $470 billion, up from over $1 trillion at the start of the year. Additionally, according to a financial filing filed late Wednesday, Musk contributed to the losses by selling about $3.5 billion worth of Tesla stock in recent days. This sum comes in addition to another amount of more than $3.9 billion in Tesla shares sold by Musk in early November. Some analysts say Musk is rushing to close the Twitter acquisition to avoid late fees, but the Tesla stock selloff is hurting the electric car maker.
Musk’s bid to buy Twitter has been controversial among Tesla investors since he announced his plan this spring. The billionaire has a large portion of his fortune in Tesla shares, and it was immediately apparent that he would have to leverage his position in order to buy the social media company. Tesla’s stock fell, but many investors remained cautiously optimistic, or at least neutral, about Musk’s deal. Investors cite their confidence in Musk, including what they perceive to be his hard work ethic and his ability to get the most out of his people.
Tesla shares fell again on Friday, down more than 4% by midday, as Musk faced backlash online after Twitter suspended several journalists’ accounts. Wake up, Tesla [conseil d’administration] – what is the plan? Who is driving Tesla and when will Elon return? , Ross Gerber, a Tesla investor who backed Musk’s offer, tweeted earlier this week. On Wednesday, he added that Tesla needed to buy back shares “to take advantage of the low stock price that Elon created,” as investors expected another potential hit to the company’s value.
Some investors believe Musk’s latest stock sale may be the last big money he sells. “But my view is that it’s wishful thinking because he’s the boy who has cried wolf over and over again,” Wedbush Securities analyst Dan Ives said, pointing to Musk’s numerous Tesla stock sales this Anna. Musk said Tuesday that he wants to make sure Tesla shareholders benefit from Twitter in the long term. However, Tesla has acknowledged in financial documents that Musk is busy with his various business ventures, citing this as a risk to the company.
Since taking the helm at Twitter in late October, Musk has wondered how long Twitter will continue to impose such onerous time limits on him. He said he would eventually reduce his time on Twitter and find someone else to run it. We are highly dependent on the services of Elon Musk, a Tesla engineer and our CEO. “While Musk spends a lot of time with Tesla and is very active in our leadership, he does not spend all of his time and attention on Tesla,” the Austin, Texas-based company said. Twitter therefore diverts all attention from Musk.
We’re literally in the best part of the company’s history, and it’s being totally demolished by Twitter. I think the stock would skyrocket if they just said “Elon is no longer the CEO of Tesla”. That’s not what I want. What I want is for him to come back to Austin,” Gerber said in an interview. Gary Black, managing partner of venture capital firm Future Fund LLC, an investor in Tesla, urged Tesla’s board to push Musk to find a leader for Twitter so he can focus his energies on the electric car business.
He will soon realize (if he hasn’t already) that his polarizing political views are hurting customers’ perception of electric vehicles [Tesla]. Customers don’t want their cars to be controversial. They want to be proud to drive them – not embarrassed,” he wrote in a tweet. He expressed hope that Musk could “focus on Tesla as CEO”. When it comes to the brand’s reputation, UK market research firm YouGov recently published research showing that negative views of the Tesla brand now outweigh positive views.
Tesla’s net positive score – meaning the number of positive reviews minus the number of negative reviews – fell below zero at the start of December. The survey suggests that consumer perception of Tesla appears to be suffering as CEO Elon Musk tries to make his mark on Twitter. Musk’s political leanings also became apparent after he bought the social media company. In addition, reports suggest that Tesla is facing slowing demand in China and rising costs of supplies to manufacture electric vehicles.
Not since Steve Jobs with Apple or Jack Welch with GE has there been a CEO whose name is so closely associated with his company’s brand. Musk’s brand is then associated with Tesla. And the circus spectacle on Twitter was a black eye for Musk and therefore a black eye for Tesla, said Dan Ives. Goldman Sachs cut its price target for Tesla, which often means analysts expect the stock to fall, although it said Tesla “remains well positioned for long-term growth.” However, analysts suggest that deliveries are likely to be weaker than expected.
They drew attention to media reports that Musk’s actions have made the Tesla brand more polarizing. We believe the Tesla brand has significant value tied to the company’s leading position in clean energy and advanced technology. Returning Tesla-related consumer attention to these core sustainability and technology attributes will, in our view, be important if Tesla is to meet or exceed long-term investor expectations for Tesla, Goldman Sachs analysts wrote.
Twitter’s future and Tesla’s are now tied together—not only by Musk’s leadership, but also by his wealth. While they wait for Musk to decide whether or not to leave the leadership of Twitter, Tesla investors continue to worry. I’m a Tesla investor and I want Elon Musk off Twitter. The value of my shares has halved since he made his move to take over this platform. I love my Model 3 but it is killing the company with its antics, Tesla shareholder Joe Cirincione wrote in a tweet on Friday.
And you?
What is your opinion on the subject?
What do you think about the fear surrounding Tesla since Musk’s takeover of Twitter?
Do you think Musk made the wrong choice in acquiring Twitter? Why ?
How do you think Musk could ease Tesla investors’ fears?
Do you think Musk should leave Twitter to get things back to normal for Tesla?
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