As of early 2022, Tesla was ranked as one of the world’s most valuable companies, with a market capitalization of $1.2 trillion. Its CEO, Elon Musk, was the richest person on the planet, with his ownership stake in Tesla giving him a net worth of $300 billion, as well as earning the admiration of many devoted investors.
“Tesla bulls, the rainbow future is here and now,” Leo KoGuan, who describes himself as Tesla’s third-largest individual shareholder, tweeted in January 2022. “Smile on your lucky self.”
As the year draws to a close, some of those investors are questioning their judgment and their commitment to the pioneering electric car company. His disappointment centers on Musk’s $44 billion purchase of Twitter in October, which has consumed the billionaire’s attention and weighed on Tesla shares.
Perhaps most galling to Tesla investors, Musk himself sold nearly $40 billion of his own stake in the company in the past year, according to a Wedbush Securities report, belying his bullish remarks about the carmaker’s prospects. cars.
With Musk selling off billions in Tesla stock and investors questioning his approach, the auto company’s stock has lost more than $700 billion in value. On Wednesday, Musk filed a regulatory filing stating that he had sold an additional 22 million shares of Tesla for about $3.6 billion, a move criticized by investors, who retweeted Musk’s promise in April “[n]or more TSLA sales planned after today.”
In fact, some prominent investors now see dark clouds instead of rainbows.
“Elon left Tesla and Tesla does not have an acting CEO,” KoGuan wrote Wednesday on Twitter. “Tesla needs and deserves to have a full-time CEO.”
Investors now feel abandoned by Musk, Dan Ives, an analyst at Wedbush Securities who covers Tesla, told CBS MoneyWatch. “For investors, the clock has struck 12: Frustration has risen enormously and Musk appears to be doubling down, not backing down.”
Tesla did not immediately respond to a request for comment.
Using Tesla “like an ATM”
Before Musk’s purchase of Twitter, the billionaire was heralded as a visionary entrepreneur who could change the world with his innovative companies: Tesla, through its adoption of electric vehicles, and SpaceX, with its goal of sending humans into the world. space.
But another passion of Musk’s, defending free speech, emerged through his surprising Twitter search. Jim Cantrell, a founding member of SpaceX, told CBS News that the billionaire wanted to “stop the ability of nation-states to restrict individual liberties. He has always been a staunch defender of free speech.”
Twitter presented a path for Musk to achieve that goal, as he had been especially critical of the social media company’s content moderation standards. But close that deal It wasn’t cheap, with Ives estimating that Musk’s $44 billion purchase price for Twitter represented a.
Due to the high price of Twitter, Musk has had to slash costs on the social network, cutting more than. But he also needed to tap into his greatest source of wealth to finance the company: Tesla stock.
“One of the biggest concerns for investors is that Musk is using Tesla as an ATM,” Ives said. “That’s been a huge glut on Tesla stock.”
Other issues with Musk’s ownership of Twitter are emerging that extend beyond investor concerns about the CEO’s stock sales. Musk’s dedication to “free speech” prompted changes at the company, including the reinstatement of previously banned accounts, including those of former President Donald Trump and far-right Republican lawmaker Marjorie Taylor Greene.
Researchers have traced asince the Musk acquisition. And Musk himself has generated controversy and condemnation with some of his recent tweets, such as a viral post on Sunday that simultaneously mocked the use of pronouns and indicated that he believed in Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious diseases. , he should be prosecuted, although he did not specify why.
“My pronouns are Prosecute/Fauci”, Musk tweeted on Sunday.
He has also retweeted far-right memes and beliefs that the Washington Post says have energized the qanon movementa fringe group selling a variety of conspiracy theories.
Musk’s determination to stir controversy could tarnish the Tesla brand for consumers who find far-right and QAnon ideology repugnant, analysts and investors say.
“Elon Musk is a brilliant business leader. He will realize soon (if not already) that his polarizing political views are affecting customer perceptions of Tesla electric vehicles,” Gary Black, a partner, wrote on Twitter. Future Fund manager and Tesla shareholder. Wednesday. “Customers don’t want their cars controversial. They want to be proud to drive them, not embarrassed.”
That could pose a real risk to Tesla’s sales, especially as rival automakers are launching their own electric vehicles and trying to grab some of Tesla’s market share, Ives said.
“Ultimately, you are alienating 50% of the population for someone selling products to the masses,” he said. “Right now they’re drinking champagne in the 313 area code because it’s a benefit to GM, Mercedes and others in this electric vehicle arms race,” Ives added, referring to the Detroit area code, where US automakers are stockpiling electric cars.
Coming Soon: Investor Activism
The combination of falling shares, a distracted CEO and concerns about the tarnishing of the Tesla brand are cooking up the potential for investor activism, Ives said.
KoGuan and others are already urging Tesla to initiate a share buyback, which is when companies buy back their own shares on the open market. Because it reduces the number of publicly traded shares, this step can help prop up or even increase a company’s stock price.
“We believe it is reaching the point where more activism and mounting investor frustration will force Tesla’s board of directors to address some of these issues in the near term,” Ives wrote in a research note Thursday.