On May 30, the news that electric car maker Elon Musk (Elon Musk) is to acquire Twitter has disturbed Tesla investors. Tesla shares have fallen 30% since Musk announced his large stake in Twitter. Some Musk and Tesla fans worry that the acquisition of Twitter will make Musk even more exhausted.
Musk’s announcement of plans to acquire personal social media Twitter has not only angered a cadre of executives and employees on Twitter, but also frustrated many diehard Tesla fans.
Tesla has lost about 30% of its market value since April 1, as the drama over Musk’s investment in Twitter stock and his eventual willingness to pay $44 billion has intensified. By comparison, the tech-heavy Nasdaq Composite is down about 15% over the same period.
The incident has some of Musk’s fans worried that he may not even care. In addition to Tesla, Musk runs the rocket company SpaceX, co-founded the tunnel-digging business Boring and a neuroscience start-up researching brain-computer interface technology. Now add Twitter, and many Tesla supporters worry that Musk might be distracted.
“I want him out,” said Gary Black, managing partner of the fund management firm Future Fund. Black’s company owns about $50 million worth of Tesla stock. As a Tesla supporter, Black said he thought the acquisition of Twitter would be a distraction from Musk, which could take more of his time.
One person who closely follows Tesla recently admonished Musk on Twitter: “Elon, Twitter is an unnecessary distraction. Just follow Tesla.”
Musk has been trying to assuage such concerns. “To be clear, I actually spend less than 5% of my time acquiring Twitter. This is not rocket science!” he tweeted last week. “I’m thinking about Tesla all the time.”
Tesla did not respond to a request for comment.
There have been concerns that Musk may have taken too much responsibility. He has built Tesla into the world’s most valuable automaker while also running the rocket company SpaceX.
But Tesla investors are already struggling to digest Musk’s repeated efforts to buy Twitter. April 1 was the last trading day before Musk disclosed that he held a large stake in Twitter. On April 25, Twitter announced its acceptance of Musk’s takeover offer, during which Tesla shares fell about 8%, Nasdaq The composite index fell about 9% over the same period.
But then Tesla began to plummet. In the days after announcing his intention to trade with Twitter, Musk sold about 9.6 million Tesla shares, worth about $8.5 billion. Then, as Tesla’s stock price continued to fall, Musk also called the acquisition “on hold” due to concerns about fake accounts on the platform. However, he stressed at the time that he remained committed to completing the acquisition.
Twitter said it was moving forward with the deal in accordance with the agreement.
Musk’s fortune is largely made up of Tesla stock. He disclosed on Wednesday that he no longer plans to use a margin loan secured against Tesla stock to finance the Twitter acquisition. Instead, he pledged to increase the stake, saying he was looking to bring in more outside funding to buy Twitter.
The recent fall in Tesla’s share price has prompted investors such as Black to pressure Tesla to buy back shares in a bid to boost investor confidence. As of the first quarter of this year, Tesla had about $17.5 billion in cash on hand.
Tesla did not respond to a request for comment on whether it was considering a share buyback. When asked in April about plans for Tesla’s future use of cash, Chief Financial Officer Zachary Kirkhorn said the company was investing in new factories and new products.
It is unclear whether the comments of some diehard Tesla fans reflect the views of major shareholders or influence Musk’s thinking.
Earl Banning, a Dayton, Ohio, psychologist and Tesla investor, said he was hesitant about Musk’s decision to buy Twitter.
“He’s already a controversial guy, which makes him more of a controversial guy,” Tesla fan Banning often tweets with Musk. However, the decision to buy Twitter did not prompt Banning to sell Tesla stock.
“Elon is still Elon,” Banning said. “I think as a long-term shareholder, the stock price is going back to where it should be because they’re running. They’re selling cars and they’re making a profit.”
Tesla reported a record first-quarter profit of $3.3 billion.
Musk’s acquisition of Twitter isn’t the only thing Tesla investors have to digest. Supply chain bottlenecks have also limited sales of Tesla vehicles. Analysts expect Tesla to deliver about 292,000 vehicles globally in the second quarter of this year, down from 310,000 in the first quarter. This means that Tesla’s shipments fell for the first time in more than two years.
It was also recently reported that in 2018 SpaceX paid a flight attendant $250,000 to settle allegations of sexual assault against CEO Musk. Musk responded that the allegations were “completely untrue.”
SpaceX President Gwynne Shotwell told company employees in a subsequent email that she personally believed the allegations against Musk were false. But Shotwell did not mention whether the company paid the settlement. SpaceX will not tolerate harassment of any kind, she said in the email.
Some Tesla backers saw an opportunity in the decline. John Stringer, who runs a club of Tesla owners in Silicon Valley, said he had increased his Tesla stake in recent weeks.
Stringer said of Musk’s unpredictable tweets and attempts to juggle several companies at once, “that’s the nature of the industry he’s running.”
“After buying Twitter, investors worry about whether Musk has time to manage Tesla”
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