Elon Musk’s Twitter Antics Are Making Tesla Investors Nervous, Just Look At The Stock Price

Key Takeaways

• Elon Musk took control of Twitter in late October.
• Since then, he has made a series of controversial changes at the company.
• He has recently been involved in various antics, including putting significant changes on the platform to a public vote, while Tesla stock continues to dive.

Since Elon Musk took control of Twitter, the platform has seen many changes and user complaints. Many feel Musk is damaging the platform, and some have taken a stand and already switched to competitors.

His recent antics, which he’s posted publicly on his Twitter account, have worried investors in his other companies, including Tesla. Here’s what you need to know.

Background

Elon Musk took control of Twitter in late October after a drawn-out acquisition process. He offered to buy the company, reneged on the offer, and eventually completed the purchase for $44 billion.

He immediately made major changes to the company, firing top executives and laying off half of the company’s employees.

Within a week, Musk started charging for Twitter Blue and gave subscribers a blue checkmark on their accounts. This feature was previously only provided to verified accounts of high-profile users, such as journalists and celebrities.

Over the following weeks, he continued his controversial decisions, demanding employees agree to be part of his revamped Twitter 2.0, committing to long hours and fast-paced work. He also unbanned former President Trump and Kanye West, among other controversial accounts.

Elon Musk’s Twitter Antics

On top of his decisions regarding the company’s management, Musk has been very vocal on Twitter.

Before unbanning Donald Trump and other controversial accounts, he put the idea to a poll. When users voted in favor of the unbanning, Musk tweeted “Vox Populi, Vox Dei” before reversing the bans.

This was one of the first instances in which Musk put Twitter’s management decisions to a poll of its users. Recently, he asked users to vote on if he should resign as the head of Twitter. Currently, more than half of the respondents have voted yes.

Musk has also used the platform to promote conspiracy theories and discrimination against various groups.

For example, he tweeted (and later deleted) links to a conspiracy theory about the violent attack on Paul Pelosi, the husband of Speaker of the House Nancy Pelosi. He also promoted anti-vaccination ideas and discrimination against transgender people.

Journalists have criticized Musk for recent bannings. He banned accounts he claims shared his location in real-time. However, critics argue that he included many non-offending accounts in the ban. Most of those accounts belonged to journalists with negative opinions of Musk.

Of concern for advertisers is Musk’s public stance on advertising. He has tweeted, “I hate advertising,” and appears to want to make the platform less reliant on ad revenue.

His most recent decision has been to ban links to other social media platforms, including Facebook or Instagram. This was met with immediate backlash as many users on Twitter rely on these other social media platforms for income.

Within hours of the backlash, Twitter held a poll to ask if they should reverse the decision, with the overwhelming majority voting yes.

In short, Musk has made a string of highly controversial decisions and is seemingly willing to put management of his massive website up to popular vote. He appears unserious about running Twitter and is happy to weaken moderation on the site.

How and why it affects Tesla

When Musk purchased Twitter, he took the company private, meaning that his antics have not impacted Twitter investors other than himself.

However, as the high-profile head of other public companies, his actions significantly impact the performance of businesses like Tesla.

Analysts have referred to “fears that the Twitter circus show is going off the rails” and that Musk has gone from “superhero to villain in the eyes of (Wall) Street.”

Musk sold a major portion of his stake in Tesla, some $22.9 billion in shares, since he purchased Twitter. That massive sell-off has led to falls in Tesla’s price.

Combined with Musk’s public mismanagement of Twitter, the sell-off has caused some Tesla investors to question his ability to keep Tesla operating successfully. Others fear that he is too focused on Twitter and not spending enough time on Tesla.

Tesla has acknowledged this concern in its filings, saying, “We are highly dependent on the services of Elon Musk, Technoking of Tesla and our Chief Executive Officer. Although Mr. Musk spends significant time with Tesla and is highly active in our management, he does not devote his full time and attention to Tesla.”

Tesla’s stock has fallen roughly 65% this year and is down roughly 33% since Musk purchased Twitter.

What it means for investors

Tesla investors are undoubtedly concerned about the company’s fate as a result of Musk’s recent Twitter antics and his massive holdings in the company. Previously the world’s richest man, Musk is now second on the list primarily due to Tesla’s plummeting stock price.

Musk holds most of his fortune in Tesla stock. Investors fear he might be forced to sell more shares to keep Twitter operating as advertisers leave the site.

Musk is also the target of multiple lawsuits at Twitter and Tesla. One of the suits regards a $50 billion payment he received as compensation from Tesla in 2018. Losing these lawsuits could have major financial implications for Musk and Tesla.

On the other hand, given that Musk’s wealth is closely-related to Tesla’s success, some investors may feel confident that he won’t allow the company to fail.

Bottom Line

Twitter has experienced a rollercoaster of changes since Elon Musk took control of the company in October. This has impacted Musk’s other holdings, especially Tesla, and many investors are uncertain how everything will play out.

Only time will tell if Musk can right the ship at Twitter and stabilize the situation at Tesla.

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