Tesla is in a highly competitive electric car market. And CEO Elon Musk was already busy juggling leadership roles at SpaceX, The Boring Company and Neuralink before pitching an unsolicited takeover bid to Twitter. That’s a lot of distractions. And it could be too much for Tesla investors.
Tesla shares tumbled nearly 4% on Thursday after Musk disclosed that he had made an offer of more than $41 billion to buy Twitter. Tesla shares rose a bit on Monday, but are still down 6% so far in 2022.
The “good news” for Tesla shareholders is that shares are not as low as automotive rivals GM, Ford and Chrysler owner Stellantis. Detroit’s Big Three shares are down more than 20% this year.
Tesla was not immediately available for comment on whether Musk’s Twitter search could distract from the company. But the company has managed to thrive despite the often circus-like atmosphere around Musk.
To that end, Tesla is expected to report a nearly 145% year-over-year increase in earnings per share when it reports first-quarter results on Wednesday.
Analysts are predicting a more than 70% jump in sales thanks to strong global demand for the company’s Model S, X, 3 and Y vehicles.
The competition is heating up
Still, all the major US auto companies are betting on Tesla, as are major European and Asian auto companies.
“Elon Musk’s offer to buy Twitter is the latest development in a weeks-long saga that is simply a distraction from the many challenges facing Tesla itself,” said David Trainer, CEO of New Constructs, an investment research firm, in an email.
“Elon Musk should focus on Tesla and not waste time trying to acquire and manage [o Twitter],” Trainer added. “Tesla is facing significant competition in the electric vehicle space. Leading automakers are catching up and making innovative electric vehicles.”
There’s also the growing threat of new EV rivals like Rivian and Lucid in the US, as well as Nio, Xpeng and Li Auto in China.
With competition around the world increasing, one would think Musk would want to prioritize Tesla rather than leaning into the social media windmill that is Twitter.
Musk’s perhaps quixotic attempt to take over Twitter and shape it into what he claims is a platform that better supports free speech could also make some prominent companies reluctant to spend money on a Musk-led Twitter.
“As Musk has demonstrated his thirst to change Twitter particularly when it comes to content moderation, some big brands may be hesitant to place ads alongside what they consider more questionable content,” Ali Mogharabi of Morningstar said in a report.
Why would that matter to Tesla? It seems reasonable to ask whether a backlash against Musk for his behavior on Twitter could make more affluent and liberal car buyers think twice about buying a Tesla in the future.
But perhaps the biggest risk to Tesla as a result of more flirting on Twitter is that the company could run into more problems that keep Musk from focusing on Tesla.
Unlike SpaceX, which has longtime president and COO Gwynne Shotwell to manage the day-to-day business, Tesla has long lacked a clear executive number two.
Several senior managers have left Tesla in recent years, including the departure of chief automotive executive Jerome Guillen last year. Tesla’s management bench is now embarrassingly thin.
The only two other top executives listed on the company’s investor relations website are Senior Vice President Andrew “Drew” Baglino, who oversees engineering, and the so-called “Master of Coin” (aka CFO) Zachary Kirkhorn.
So if Musk is serious about adding Twitter to his massive financial empire, it might be a good idea for Tesla to make it clear to Wall Street who would be calling the shots there.
There are only so many hours in the day, which means that if Musk feels the need to pay more attention to fixing the bluebird, he’d be thinking less about how to make cool new cars and trucks.
Source: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
