On one side is the share price of Tesla cut, on the other side is in the chaos of Twitter, and space exploration company SpaceX, brain neuroscience company Neuralink and underground tunnel company Boring Company, at the same time taking care of a number of companies Elon Musk, is facing a difficult balance of the situation. Faced with the continuous decline in stock price and the multi-tasking Elon Musk, Tesla shareholders finally shouted “Elon Musk out”.
Elon Musk called out for stepping down
Last Thursday, Tesla’s third largest natural shareholder, Indonesian billionaire KoGuan Leo, publicly called out Musk’s dismissal in several tweets. KoGuan Leo is a big Musk follower who bought a lot of shares because he believed in Tesla’s prospects, and even sold off other stocks to focus on Tesla.
At its peak, his Tesla holdings were worth more than $7 billion. As Tesla shares have continued to fall this year, Liao’s investment has shrunk to $3.4 billion, but he remains the third-largest individual shareholder in Tesla behind Elon Musk and Oracle founder Larry Ellison.
What made the billionaire publicly demand Elon Musk’s ouster? Liao Kaiyuan accused Elon Musk of investing too much energy in Twitter. “Elon Musk abandoned Tesla, which now doesn’t have a working CEO. tesla needs and deserves a full-time CEO,” he later added, “Elon Musk used to be a proud father and Tesla grew up. (Now Tesla) needs an executive like Cook, not Elon Musk.”
He wrote, “I was already a billionaire when I invested in Tesla and will continue to invest in Tesla in the future because the company will be the biggest business with or without Musk. I invested in Tesla because of Elon Musk. I wanted him to stay on as CEO, but he abandoned Tesla.”
Apparently, the low performance of Tesla’s stock price this year and Elon Musk’s single-mindedness have made investors very unhappy. Last week alone, Tesla shares fell 16%, the worst performance in the past two years, the past year is down more than 60%, from a high of $ 402 at the end of last year, all the way down to the current $ 150, the market value has evaporated more than $ 700 billion, is still less than $ 500 billion.
The plunge in Tesla’s stock price will of course also affect Elon Musk’s personal fortune. That’s because Tesla holdings are his most significant asset. In the past year, Elon Musk’s personal assets have fallen by more than $100 billion and have now shrunk to less than $170 billion, giving up his position as the world’s richest man.
Cashing out at high levels leads to discontent
Although Liao Kaiyuan still believes in the future upside of Tesla shares and plans to buy Tesla at the bottom, he called on Tesla’s board to start looking for a new CEO and let Elon Musk pick his own successor. In addition, Liao Kaiyuan called on Elon Musk to join him in buying Tesla shares to boost the persistently low stock price. He is apparently very unhappy with Elon Musk’s continued selling of Tesla shares to cash out over the past year.
As Tesla’s largest shareholder and CEO, Elon Musk is the one who has been cashing out the hardest at the highs. Just last week, he sold off another $3.5 billion to cash out, for a cumulative total of $7.5 billion in the past two months. Elon Musk has been selling continuously since Tesla’s stock hit a high of $402 last December and has cashed out a total of $39 billion.
Elon Musk did not explain the purpose of his cash, and speculation is that he may be using it for Twitter-related funding needs. Elon Musk began acquiring a large number of Twitter shares in late January, forced the Twitter board to accept a $44 billion offer in late April, and finally completed the deal at the original price in late October after a series of repeated retreats and litigation pressure.
Of the $44 billion he spent on Twitter, $13 billion came from bank loans, with interest payments of $1 billion a year alone. And, to fund the acquisition, Elon Musk had already sold $13 billion of Tesla stock in May of this year. In August, he sold another $6.9 billion in stock, citing the need to raise funds to complete the acquisition.
It is undeniable that there are many macro and own factors behind the fall in Tesla’s share price: the Federal Reserve continues to raise interest rates, leading to a sharp downward adjustment in the U.S. stock market this year, which also leaves the U.S. economy facing the shadow of recession, which may affect Tesla’s future sales; in addition, Tesla is also facing supply chain and inventory problems.
But it is also inescapable that Elon Musk himself is also an important reason for the significant drop in Tesla’s share price. Although Elon Musk personally made Tesla into a global electric car leader, the market value once exceeded a trillion dollars, but this year his series of operations have made Tesla investors feel disappointed but also caused Tesla’s share price fell sharply as a direct result.
Now, Tesla, the situation is not optimistic. With capacity utilization at the Berlin, Germany and Austin, Texas plants at only 20%, Elon Musk has pulled the head of China, Xiaotong Zhu, and the engineering team to Texas to boost capacity. In order to boost sales, Tesla started to cut prices in China. And if the U.S. and even the global economy fall into recession, demand in the auto market will decline as well.
The stock price is negatively correlated with Twitter
Perhaps Tesla investors are more worried about Elon Musk’s multi-tasking and lack of attention to Tesla than Elon Musk’s high level of cash. According to Wedbush analyst Dan Ives, Tesla investors are concerned that Elon Musk is only using Tesla as a source of funding for his Twitter plans and is not responsible for Tesla’s financial stability. .
Tesla’s stock price seems to show a direct negative correlation with Elon Musk’s acquisition of Twitter. At the time Elon Musk announced the acquisition of Twitter, Tesla’s market capitalization was over $1 trillion, but now it is less than $500 billion, and the stock price has directly declined. Tesla has also been the most depressed tech giant this year, dropping far more than the Nasdaq and S&P components over the same period, leaving aside the overall stock market downgrade.
At one point after the acquisition deal was reached in late April, Elon Musk planned to abandon the deal as the stock market plunged. Immediately after he announced his withdrawal from the deal, Tesla shares rallied. It looked as if Tesla investors were relieved and re-injected with confidence.
But under pressure from a lawsuit by Twitter’s board of directors, Elon Musk was eventually forced to complete the acquisition at the original price of $44 billion. He lost a lot of money on the deal. Without the acquisition deal, Twitter’s market value would have fallen below $20 billion, which is more than double the premium he paid. Add to that the fact that Elon Musk had to sell at the low point of Tesla’s share price to raise money for the acquisition, and it amounts to a double loss for him.
After completing the acquisition, Elon Musk took on the CEO role of Twitter himself, eager to move forward with his transformation plans. This is his third CEO position, running three companies – Tesla, SpaceX and Twitter – at the same time. In addition, he has the occasional distraction of two startups, Neuralink, a brain company, and Boring Company, an underground tunneling company. This kind of “multitasking” is unique in the history of global business.
Multiple CEOs are hard to juggle
Even though Elon Musk is a master of time management, he only has 24 hours in a day. The amount of time he spends on running Twitter means less time on running Tesla.
In the past month and a half,
In the past month and a half, Elon Musk, as seen by the outside world, seems to have spent most of his energy on Twitter’s massive layoffs, new features, and pushing back on rebuilding content review standards and other chores.
Elon Musk, as seen by the outside world, seems to have spent most of his energy on Twitter’s massive layoffs, new features, and pushing back on rebuilding content review standards and other chores.
After taking the reins, the vast majority of Elon Musk’s tweets were Twitter-related, and he was busy explaining the need for big layoffs, rolling out new products that charge for tweets, and placating big advertisers who have stopped placing them. This has also raised concerns among Tesla investors about how much time Musk has left to spend on Tesla with all the energy he’s putting into Twitter.
Elon Musk was also happy to show the outside world how much he was invested in Twitter: staying up late with engineers to review code. Elon Musk once slept at the Fremont assembly plant to boost Tesla’s production capacity, but now he’s showing the outside world that he sleeps on the couch at Twitter headquarters and has even turned the conference room into a makeshift dormitory
Just last Tuesday, Elon Musk took part in a Twitter Spaces event, talking about his plans to revamp Twitter in front of an audience of 300,000. But halfway through the mic, Elon Musk had to go offline early: “I have a Tesla meeting scheduled and I’m late.” In order to participate in the mic, to the outside world to convey confidence in Twitter, Elon Musk has delayed Tesla’s internal high-level meetings.
Promised return and broken promise
At last month’s Tesla shareholder lawsuit trial, one of the big arguments made by plaintiffs’ lawyers was that Tesla’s board did not ask Elon Musk to focus on his Tesla work when they awarded him astronomical option pay. And now Musk is not focused on Tesla at all, so the astronomical salary is not reasonable.
Plaintiffs’ lawyers specifically argued that by bringing Tesla’s software engineers to Twitter to review the code, Elon Musk was illegally diverting resources from a public company for his own personal benefit, to the detriment of Tesla shareholders. This is because Twitter is Elon Musk’s personal asset and has nothing to do with the publicly traded company Tesla.
Elon Musk explained in court that the engineers had volunteered to help and had gone to Twitter outside of Tesla’s working hours to participate in code reviews. But in reality, Elon Musk misappropriated far more of Tesla’s resources than just those engineers, calling at least 17 executives from Tesla and SpaceX to Twitter to help with operations, including Nagesh Saldi, Tesla’s chief information officer.
In the middle of last month’s trial, Elon Musk said he would complete a fundamental organizational rebuild of Twitter within a week and soon shift his energy back to Tesla and find a new CEO for the company.
Perhaps Elon Musk’s current priority is to turn around Twitter’s operations, plug the loss hole, and let Twitter bleed as quickly as possible to pay off his massive $13 billion in debt and avoid continuing to sell Tesla stock to cash in on the loan. This is also the main reason why he completed the acquisition and then devoted himself to the transformation of Twitter.
Twitter’s annual revenue is about $5 billion, more than 90% of which comes from advertising, but last year it lost $220 million, and in the second quarter of this year it lost $270 million again. After Elon Musk completed the acquisition, he made two major layoffs, cutting the total number of employees from 7,500 to less than 2,000.
Twitter’s Negativity Continues
What Elon Musk didn’t anticipate, however, was the strong resistance from Twitter’s big advertisers to his move. After he completed the acquisition, big advertisers such as L’Oreal, Allianz Insurance and United Airlines suspended their Twitter ads. IPG, the world’s largest advertising agency, even advised its clients to suspend their placements on Twitter altogether.
It is worth mentioning that Elon Musk’s use of Tesla employees to work on Twitter has sparked even more discontent from big car companies such as General Motors. These car companies questioned that Tesla employees could see the backend data of Twitter, which meant that their audience and advertising data on the Twitter platform would also be in the hands of competitors. Ford, General Motors and Volkswagen have stopped advertising after Musk’s arrival.
According to the New York Times, Twitter’s original fourth-quarter revenue target of $1.4 billion, down from $1.6 billion a year earlier, had to be lowered from $1.4 billion to $1.3 billion and then to $1.1 billion as big advertisers continued to leave. It was against this backdrop that Twitter launched its ad payoff program late last month, which amounted to a price cut promotion.
In addition, Elon Musk’s entry into Twitter has sparked more controversy by completely overturning and rebuilding Twitter’s content review standards. He entered Twitter under the banner of “free speech,” accusing its previous executives of having a leftist content review standard and promising to form a multi-perspective content review committee to make major decisions.
But in less than a month, Elon Musk has abandoned the idea of a “content review board” and disbanded Twitter’s original external advisory board, frequently using Twitter votes as his sole criterion for personal decisions, reinstating former President Trump and tens of thousands of blocked right-wing accounts in quick succession.
Just last week, Elon Musk claimed that someone was stalking his young son in Los Angeles, abruptly adjusting the rules of the Twitter platform to prohibit the sharing of information about others’ locations, blocking the account that recorded the trajectory of his private plane through public data as well as the personal account of the operator, and also blocking many mainstream media reporters who criticized him for the incident.
The irony is that just a month ago Elon Musk vowed to follow the principle of free speech and not block the private jet track record account. Moreover, when the LAPD contacted Elon Musk’s security team about the stalking, Elon Musk’s security team did not report any violations.
The arbitrary blocking of media reporters has created a huge controversy for Elon Musk. Not only was he roundly protested by the mainstream media, but he was even warned by the European Commission of penalties. After being under public pressure, Elon Musk unblocked the media reporters’ accounts two days later in the name of voting. While he was dealing with these negative storms, Tesla’s stock price was sliding.
Shareholders would prefer his return
Webbush analyst Avis noted that Tesla investors are increasingly wary of Elon Musk, much like the boy who cried wolf. It is in this context that even those Tesla investors who once supported Elon Musk’s acquisition of Twitter are now losing patience.
Ross Gerber, the founder of the Gerber Kawasaki Fund and a key institutional shareholder in Tesla who once backed Elon Musk’s acquisition of Twitter, has lost his temper. He tweeted last Thursday, “Tesla’s board should wake up, what’s your plan? Who is running Tesla now and when the hell is Musk coming back?”
After learning that Elon Musk had doubled down on selling Tesla shares to cash out again, Gable and Liao Kaiyuan made the same request: Tesla needs to buy back shares to boost a stock price that has fallen because of Musk’s single-mindedness and high cash-out.
But now Elon Musk clearly does not have the funds to buy back shares. Over the past period, Musk’s team has started looking for new investors and plans to sell Twitter shares at his buyout price, bringing in new money for Twitter to fill the deficit and also reduce its own financial pressure.
In an interview with the media, Gobbo resented Twitter, “We were at the best stage in Tesla’s history, but now everything is ruined by Twitter. I think if Tesla announced that Elon Musk was no longer CEO, Tesla’s stock price would have rebounded dramatically. But I don’t want that, I just want him back at Tesla headquarters in Austin.”
