As early as 2022, Tesla is ranked as one of the most valuable companies in the world with a market cap of $1.2 trillion. Its CEO, Elon Musk, was the wealthiest man on the planet, with his ownership stake in Tesla earning him a net worth of $300 billion as well as winning the admiration of many dedicated investors.
“Tesla bulls, the rainbow of the future is here and now,” Leo Koguan, who describes himself as Tesla’s third largest individual shareholder, tweeted in January 2022. “Smile to your luckier self.”
As the year draws to a close, some of those investors are questioning their decision and their commitment to the leading electric car company. His disillusionment centers on Musk’s October purchase of Twitter for $44 billion, which has caught the billionaire’s attention as well as weighed on Tesla shares.
Perhaps most troubling for Tesla investors, according to a report from Wedbush Securities, is the fact that Musk himself has sold nearly $40 billion of his own stake in the company in the past year — adding to his bullish view of the automaker’s prospects. Rejecting the announcements.
Musk sold billions of Tesla shares and investors questioned his focus, eroding the value of the car company’s stock by more than $700 billion. On Wednesday, Musk filed a regulatory document indicating he sold an additional 22 million shares of Tesla for about $3.6 billion — a move decried by investors, who “retweeted Musk’s pledge in April”.[n]o Plans for further TSLA sales after today.”
In fact, some prominent investors are now seeing dark clouds instead of rainbows.
“Elon leaves Tesla and Tesla has no acting CEO,” Koguan wrote on Twitter on Wednesday. “Tesla needs and deserves a full-time CEO.”
Dan Ives, an analyst at Wedbush Securities who covers Tesla, told CBS MoneyWatch that investors now feel abandoned by Musk. “For investors, the clock has turned to 12 – the pessimism has built up massively, and the muses are doubling down, not backing down.”
Tesla did not immediately respond to a request for comment.
Using Tesla “as an ATM”
Prior to Musk’s purchase of Twitter, the billionaire was heralded as a visionary entrepreneur who could change the world with his innovative companies: Tesla, through the adoption of electric vehicles, and SpaceX, sending humans into space. With your target to send.
But another of Musk’s passions — defending free speech — emerged through his surprising discovery of Twitter. Jim Cantrell, a founding member of SpaceX, told CBS News that the billionaire “wanted to curb the ability of nation-states to restrict individual liberty. He’s always been a fierce free-speech advocate.”
Twitter presented a path for Musk to achieve that goal, as he had been particularly critical of the social-media company’s content moderation standards. but get that deal wasn’t cheap, Ives estimated that Musk’s $44 billion purchase price for Twitter represented a,
Due to the hefty price tag for Twitter, Musk has had to dramatically reduce costs at the social media network, cutting more than, But he also needed to use his biggest source of wealth to fund the company – Tesla stock.
“One of the big concerns of investors is that Musk is using Tesla as an ATM machine,” Ives said. “Tesla’s stock has skyrocketed.”
Other issues are emerging with Musk’s ownership of Twitter that go beyond investor concerns over the CEO’s stock sales. Musk’s dedication to “free speech” has prompted changes at the company such as restoring previously banned accounts such as those of former President Donald Trump and far-right Republican Congresswoman Marjorie Taylor Greene.
researchers have trackedSince the acquisition of Musk. And Musk himself has courted controversy and condemnation with some of his recent tweets, such as a viral post on Sunday that mocked the use of simultaneous pronouns, indicating that he was referring to Dr. . Anthony Fauci believes. , should be prosecuted, although he did not specify why.
“My pronouns are Prosecute/Fauci,” Musk Tweeted on Sunday.
They have also retweeted far-right memes and beliefs that, according to the Washington Post, have fueled the QAnon movement, a fringe group that adheres to a variety of conspiracy theories.
Analysts and investors say Musk’s determination to stoke controversy could tarnish the Tesla brand to consumers who find far-right and QAnon ideology repulsive.
Future Fund managing partner and Tesla shareholder Gary Black wrote on Twitter, “Elon Musk is a brilliant business leader. He will soon (if not already) realize that his polarizing political views are hurting customer perception of Tesla EVs.” are delivering.” Wednesday. “Customers don’t want their cars to be controversial. They want to be proud as hell to drive them—not embarrassed.”
This could pose a real risk to Tesla’s sales, especially as rival automakers are rolling out EVs of their own and trying to grab a chunk of Tesla’s market share, Ives pointed out.
“After all, you’re alienating 50% of the population from someone who’s selling a product to the public,” he said. “At the moment they’re popping champagne in the 313 area code because it’s an advantage for GM, Mercedes and others in the EV arms race,” Ives said, referring to Detroit’s area code, where American automakers are working on electric cars. are accumulating.
Coming Up: Investor Activism
Ives said the combination of bearish stocks, a distracted CEO and concerns about the tarnishing of the Tesla brand is raising the prospect of investor activism.
Koguan and others are already urging Tesla to initiate share buybacks, which are when companies repurchase their shares on the open market. Because it reduces the number of publicly traded shares, such a move can help increase or even boost a company’s share price.
“We believe it is getting to the point that more activism and growing investor frustration will force Tesla’s board to confront some of these issues in the near future,” Ives wrote in a Thursday research note.