It was just 14 months ago that the US electric car manufacturer was there Tesla worth more than a trillion dollars in the stock market. Since April, however, a steep descent has set in: Tesla is now worth less than half on the stock market at around 450 billion dollars. Calculated from the record high, Tesla shares have even lost more than 60 percent in value. How can that be?
Tesla guided by the magician Elon Musk, was considered the epitome of the automotive future: That was the dominant narrative until the beginning of 2022. Great technological lead, the fastest pace of innovation, a breathtakingly fast transformation from luxury supplier to mass manufacturer: This is one of the reasons why Tesla is (still) worth significantly more on the stock exchange than they are three car thick ships Volkswagen, bmw and Mercedes together. But the image of the winning company Tesla has gotten bigger and bigger cracks.
Tesla shareholders do not attribute the decline of the group so much to the recent difficulties in China, but mainly to one decision: Tesla boss Elon Musk’s disastrous entry into the short message service Twitter. Ever since Musk acquired Twitter for $44 billion — more specifically, unable to wriggle out of the deal — two factors have weighed heavily on Tesla like millstones.
From savior to risk factor
First, Musk needs money to fund the Twitter purchase. The wealth of what is now only the second richest man in the world is based primarily on his shares in Tesla: Since the Twitter deal was announced, Musk has repeatedly separated from Tesla shares in large numbers and thus redeemed billions. Musk’s repeated sales have recently accelerated the price decline in Tesla shares. Musk’s net worth has fallen to $154 billion, according to Forbes. The richest person is currently the French luxury entrepreneur
and LVMH– Boss Bernard Arnault (73).
Second: The chaos surrounding Twitter ensures that Musk can only spend a little time and little “management attention” on the much more valuable company, Tesla. Musk is turning to the Twitter recovery case — at the expense of a profit-making machine like Tesla. The argument about Twitter takes up a lot of his time – even if he says he only needs a little sleep. Musk has also alienated the public with his controversial decisions to fire about half the workforce and reinstate previously suspended accounts. This is accompanied by a role change: Musk has gone from being a savior to a risk for companies.
Tesla’s Twitter trauma: the share price initially continues to slide
No wonder Tesla investors are longing for the end of the Twitter nightmare. And they are now one step closer to this end: Musk surprisingly called on Twitter users on Monday night to vote on whether he should resign as Twitter boss. And the result of the survey was clear: By midday on Monday (CET), 57.5 percent of users voted in favor and 42.5 percent against Musk stepping down as head of Twitter. Over 17.5 million users took part in the vote.
If Musk sticks to his announcement, as Twitter boss he should now clear the way for a successor. It would be an end to the dual role of Twitter and Tesla boss. Musk could focus more on Tesla again in the future. For Tesla shareholders, that sounds like a promise – even if it is Tesla shares initially continued their slide on Monday.
Apparently, Musk’s decision to make his future as Twitter CEO dependent on a simple Twitter vote didn’t exactly increase trust in the often erratic company leader. And more importantly, the fact that Twitter users are sending the former superstar to the desert is a clear indication that Musk’s image has suffered a lot in recent months.
US Senator Warren: Has Musk’s Dual Role Hurt Tesla Shareholders?
While shareholders are still speculating about Musk’s consequences of the vote and when he will step down from his job as Twitter CEO, Massachusetts Senator Elisabeth Warren focuses on an issue that could have legal ramifications for Musk: According to a report by the “New York Times”
Warren asks whether Musk’s CEO stint on Twitter harmed Tesla shareholders.
Warren argues that Musk’s dual role as CEO of both Tesla and Twitter creates the potential for a conflict of interest. In addition, there could be an “unequal distribution of resources to the detriment of Tesla,” reports the NYT, referring to Dealbook. If the US Securities and Exchange Commission is also interested in the questions raised by Warren, this could also have legal consequences for dual CEO Elon Musk.
“Tesla needs urgent attention”
It’s troubling to see a CEO basing key business decisions on the judgment of public opinion, especially at a time when Tesla investors are yearning for a return to stability, said market analyst Susannah Streeter of investment firm Hargreaves Landsdown. Streeter said the hope behind the resignation is that Musk will finally give the carmaker the attention it desperately needs at a time when the company is being rocked by expectations of falling demand in China
Musk has not yet announced when he will resign. “There is no successor,” he replied when asked by a Twitter user about a possible change in the post. The fact is, however, that Musk would remain the most powerful man on Twitter even without his managerial post, after all he owns the company.
The fact that Musk will continue to own and employ Twitter even if he steps down as CEO is not lost on many investors. Musk’s personal Twitter drama — even after a potential CEO resignation — is far from over.