Elon Musk Losing His Grip On Tesla and Twitter

17/12/2022, 11:12 Elon Musk losing his grip on Tesla and Twitter
Business Entrepreneurship Billionaires
OPINION
Elon Musk is now losing his grip on

Tesla and Twitter
There is a theory about Elon Musk - largely peddled by his legion of creepy, armchair fanboys -
that everything he touches turns to gold. There is no doubt that he is among the world’s great
visionaries. After all, this is a man who has effectively created the carmaker of the future from
nothing. He is also on a quest to power the world with solar panels and batteries, plans to
construct a network of tunnels to eliminate congestion, and one day colonise Mars.
Elon Musk is unsettling investors as he offloads Tesla stock. BLOOMBERG
But his foray into the fickle world of social media is testing the hypothesis of Musk as a
modern-day Midas to its absolute limits.
His ownership of Twitter, while still in its infancy, has been for the most part, one crisis after
another. In fact, at a company where half the workforce and thousands of contractors have
https://www.smh.com.au/business/entrepreneurship/elon-musk-is-now-losing-his-grip-on-tesla-and-twitter-20221216-p5c6v9.html 1/8
been shown the exit, there has been an exodus of major advertisers and the possibility of
bankruptcy has already been raised, it’s hard to imagine how things could get much worse.
Still, as long as his problems were confined to the troubled social media platform, Musk and his
loyal followers could get away with saying it was a one-time blemish on an otherwise
unimpeachable track record.
Yet increasingly it looks as though that might not be the case. In his efforts to prove the
doubters wrong, there are growing concerns that the serial entrepreneur is exhausting so much
time and effort trying to get to grips with Twitter, that Tesla - the jewel in the crown of his
business empire - is beginning to suffer.
Musk’s habit - which is what it has become - of offloading huge tranches of the carmaker’s
stock to prop up his latest endeavour is fuelling investor jitters about where his priorities lie.
In a regulatory filing submitted on Wednesday it was revealed that the serial entrepreneur had
sold another slug of Tesla equity - 22 million shares in total - in the preceding few days, this
time worth nearly $US3.6 billion. It is widely assumed that Musk needs the proceeds to help
fund his takeover of Twitter.
The financing arrangements for the deal read like a bad dream, particularly against a backdrop
of rapidly rising interest rates. To meet the $US44 billion purchase price, Musk borrowed
$US12.7 billion of bank debt and persuaded existing Twitter investors to part with $US7 billion
of equity, which left him on the hook for the remaining $US24 billion.
With the large bulk of Musk’s wealth tied up in Tesla, he has relied on large share sales to
bridge the giant funding gap.
But the latest has provoked something akin to fury and a demand for regime change among his
usually ultra-loyal shareholder base, as each stock transaction weighs on Tesla’s share price.
“Elon abandoned Tesla and Tesla has no working CEO,” Koguan Leo tweeted. Koguan is
reported to be the third-largest individual shareholder of Tesla, and has previously described
himself as a Musk “fanboy”. He said: “Are we merely Elon’s foolish bag holders?” Someone
“Tim Cook-like is needed, not Elon”.
The latest share sale was the third since the billionaire declared (on Twitter, of course) in April
that there would be “no further TSLA sales” to support the deal. He has now cashed out a total
of $US23bn worth of Tesla stock - just $US1 billion shy of the funding shortfall - since
announcing his plans to buy Twitter.
Having begun the year trading at $US399, shares in the carmaker were changing hands for
$US158 yesterday - their lowest level for more than two years and a fall of 60 per cent since the
start of the year.
When Musk first signalled his interest in buying Twitter, at the start of year, Tesla had a market
cap of more than $US1 trillion. It is now worth less than $US500 billion, though admittedly
some of that spectacular value destruction is explained by the broader sell-off in technology
stocks.
“Musk continues to throw gasoline in the burning fire around the Tesla story by selling more
stock”, Dan Ives, at Wedbush Securities, said. Ives accused Musk of using Tesla “as his own ATM
to keep funding the red ink at Twitter”.
Justifiably, investors are also beginning to seriously question not just if Musk is distracted, but
whether the constant controversy surrounding his chaotic overhaul of the social network is
beginning to tarnish the Tesla brand and harm sales.
“Elon is a brilliant business leader. He will realise soon (if not already) that his polarising
political views are hurting customer perceptions of $USTSLA EVs,” Gary Black, who runs the
Tesla investor Future Fund, tweeted.
“Customers don’t want their cars to be controversial. They want to be proud as hell to drive
them - not embarrassed,” Black said.
Tesla is losing market share as its rivals get up to speed. BLOOMBERG
And that’s before you get to the structural challenges that Tesla is obviously facing, chiefly
among them what the future holds in China, which Ives calls “the heart and lungs of the Tesla
growth story”, if a trade war with the US escalates.
Beijing has fired a warning shot, imposing restrictions on Tesla cars on the basis of spying
fears, but there must be concerns over whether it ultimately ends up being locked out of China
if trade relations continue to deteriorate.
Meanwhile, traditional car manufacturers seem to be finally getting their act together in the
electric market, at the same time as larger Chinese rivals such as BYD pile into Europe.
In an apparent attempt to address shareholder concerns, Musk tweeted: “I will make sure Tesla
shareholders benefit from Twitter long-term”, without explaining how, precisely. But will many
hang around to find out?
Telegraph, London
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17/12/2022, 11:12 Elon Musk losing his grip on Tesla and Twitter

Business Entrepreneurship Billionaires

Elon Musk is now losing his grip on

Elon Musk is unsettling investors as he offloads Tesla stock. BLOOMBERG

Tesla is losing market share as its rivals get up to speed. BLOOMBERG

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