It seems that Elon Musk is causing actual problems for Tesla. Today CNN is reporting that Tesla stock, which has frankly been in free fall as Elon has “fun” over at Twitter has been downgraded:
Oppenheimer & Co. downgraded its rating on Tesla, where Musk is the CEO, solely because of risks posed by the billionaire’s ownership and management of Twitter.
“We believe Mr. Musk is increasingly isolated as the steward of Twitter’s finances with his user management on the platform. We see potential for a negative feedback loop from departure of Twitter advertisers and users,” Oppenheimer analyst Colin Rusch wrote to clients.
An exodus of advertisers will only further erode Twitter’s finances and force Musk to unload even more Tesla stock to cover the cash hole, the firm wrote.
Oppenheimer specifically cited Twitter’s decision last week to ban several journalists, including CNN’s Donie O’Sullivan, as a catalyst for the downgrade.
And:
Rusch, the Oppenheimer analyst, said the “inconsistent standards application” for Twitter users has helped create a “broad public backlash” against Musk that will in turn hurt Tesla.
“We believe banning journalists without consistent defensible standards or clear communication in an environment where many people believe free speech is at risk is too much for a majority of consumers to continue supporting Mr. Musk/TSLA, particularly people ideologically aligned with climate change mitigation,” Rusch wrote.
In other words, Musk’s antics are bad for business, even the business of Tesla.
It likely doesn’t help that Elon and Tesla are getting some unwanted attention from a prominent senator:
Sen. Elizabeth Warren sent a letter to Tesla’s board on Sunday questioning whether Elon Musk’s Twitter acquisition had led the billionaire to misappropriate the electric-car maker’s resources and created “unavoidable conflicts of interest.”
Warren said Musk’s Twitter takeover has “raised questions about possible violations of securities or other laws, including whether Mr. Musk is funneling Tesla resources into Twitter, a potentially ‘improper diversion of resources that might impact Tesla’s sales and earnings’ and could result in ‘delays in programs at Tesla,'” The New York Times was the first to report.
The letter said those misappropriated resources could include labor, like software engineers and senior executives.
The senator warned Tesla’s board members that it is their job to ensure “that a controlling shareholder (especially one who is also a Chief Executive Officer, or CEO) does not treat the company as a private plaything.” Warren cited reports that Musk has brought in dozen of Tesla employees to assist in his Twitter takeover, saying it could violate the billionaire’s “legal duty of loyalty to Tesla.”
Well, the number of politicians on Capitol Hill sending letters like these to companies that Elon controls is starting to pile up. It honestly won’t be a surprise to me if at some point in the near future that formal investigations begin in terms of some or all of his companies.
Speaking of Elon, I noted this earlier today:
I think this is telling. After all, this is a guy who can’t go five minutes without Tweeting something. But he’s been silent for almost 24 hours, which is an eternity for him. I am sure that we’ll find out what this means shortly. As this is a guy who cannot stay out of the limelight for long.
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This entry was posted on December 19, 2022 at 4:59 pm and is filed under Commentary with tags Tesla, Twitter. You can follow any responses to this entry through the RSS 2.0 feed.
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Tesla Stock Downgraded As It Pays For Elon’s Sins…. And Other Oddities Of Life
It seems that Elon Musk is causing actual problems for Tesla. Today CNN is reporting that Tesla stock, which has frankly been in free fall as Elon has “fun” over at Twitter has been downgraded:
Oppenheimer & Co. downgraded its rating on Tesla, where Musk is the CEO, solely because of risks posed by the billionaire’s ownership and management of Twitter.
“We believe Mr. Musk is increasingly isolated as the steward of Twitter’s finances with his user management on the platform. We see potential for a negative feedback loop from departure of Twitter advertisers and users,” Oppenheimer analyst Colin Rusch wrote to clients.
An exodus of advertisers will only further erode Twitter’s finances and force Musk to unload even more Tesla stock to cover the cash hole, the firm wrote.
Oppenheimer specifically cited Twitter’s decision last week to ban several journalists, including CNN’s Donie O’Sullivan, as a catalyst for the downgrade.
And:
Rusch, the Oppenheimer analyst, said the “inconsistent standards application” for Twitter users has helped create a “broad public backlash” against Musk that will in turn hurt Tesla.
“We believe banning journalists without consistent defensible standards or clear communication in an environment where many people believe free speech is at risk is too much for a majority of consumers to continue supporting Mr. Musk/TSLA, particularly people ideologically aligned with climate change mitigation,” Rusch wrote.
In other words, Musk’s antics are bad for business, even the business of Tesla.
It likely doesn’t help that Elon and Tesla are getting some unwanted attention from a prominent senator:
Sen. Elizabeth Warren sent a letter to Tesla’s board on Sunday questioning whether Elon Musk’s Twitter acquisition had led the billionaire to misappropriate the electric-car maker’s resources and created “unavoidable conflicts of interest.”
Warren said Musk’s Twitter takeover has “raised questions about possible violations of securities or other laws, including whether Mr. Musk is funneling Tesla resources into Twitter, a potentially ‘improper diversion of resources that might impact Tesla’s sales and earnings’ and could result in ‘delays in programs at Tesla,'” The New York Times was the first to report.
The letter said those misappropriated resources could include labor, like software engineers and senior executives.
The senator warned Tesla’s board members that it is their job to ensure “that a controlling shareholder (especially one who is also a Chief Executive Officer, or CEO) does not treat the company as a private plaything.” Warren cited reports that Musk has brought in dozen of Tesla employees to assist in his Twitter takeover, saying it could violate the billionaire’s “legal duty of loyalty to Tesla.”
Well, the number of politicians on Capitol Hill sending letters like these to companies that Elon controls is starting to pile up. It honestly won’t be a surprise to me if at some point in the near future that formal investigations begin in terms of some or all of his companies.
Speaking of Elon, I noted this earlier today:
I think this is telling. After all, this is a guy who can’t go five minutes without Tweeting something. But he’s been silent for almost 24 hours, which is an eternity for him. I am sure that we’ll find out what this means shortly. As this is a guy who cannot stay out of the limelight for long.
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This entry was posted on December 19, 2022 at 4:59 pm and is filed under Commentary with tags Tesla, Twitter. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.