Elon had to decide between Twitter or Tesla. Elon chooses Tesla.

Carina Johansen/Getty Images, Jeremy Moeller/Getty Images
Elon Musk was forced to choose between Tesla and Twitter. Tesla shareholders have put pressure on Musk over his role as CEO of Twitter.

Maybe he got caught up in the excitement of it all. After spending Sunday’s World Cup final at Qatar’s Lusail Stadium with Jared Kushner, a group of Gulf sheiks and others, Elon Musk decided that he would take a Twitter poll asking whether he should step down as CEO.

The verdict is in: 57% of the more than 17,000,000 people who voted for Musk believe he should step down as billionaire Twitter owner. Musk stated he would “abide to the results of this survey,” prompting speculation regarding a possible resignation and replacement candidates.

This poll was taken just moments after Musk apologized for introducing a new Twitter policy that prohibited users from linking to their profiles on other social media sites like Instagram, Mastodon and Nostr. It caused fury among users. Twitter removed the policy in less than 12 hours.

On Monday, Dan Ives (Managing Director of Equity Research at Wedbush Securities) stated that the poll’s results were not surprising “given that Musk’s takeover of Twitter in October has essentially been an epic debacle.”

The poll was ultimately decided by Musk, who needed to choose which company to lead: Tesla or Twitter. Analysts and shareholders gave him a lot of grief last week, so he had to decide which company he preferred.

He picked Tesla because it represents almost all of his estimated $156 billion wealth. The Twitter poll provided him with a handy escape hatch.

Tesla under pressure

Musk has been asked many times how he manages multiple companies during his time in the spotlight. Even the most experienced CEO would find it difficult to oversee SpaceX, Tesla, SpaceX, Neuralink, and Boring Company.

Tesla backers were rightly worried about Musk’s responsibility when Twitter was added. These concerns came to an abrupt halt last week.

Leo KoGuan, Tesla’s third largest individual shareholder, posted his frustrations with Musk on December 14th. He suggested that he had “abandoned Tesla” and that Tesla doesn’t have a working CEO. He suggested that Musk should be replaced by someone who is subject to independent supervision by the board of directors.

–KoGuan Leo (@KoguanLeo), December 14, 2022

Ross Gerber, a Tesla shareholder and CEO at Gerber Kawasaki Wealth and Investment Management tweeted Saturday that it was in Elon’s best interests for Tesla shareholders to return to work full-time.

These frustrations are understandable. According to SEC filings, Tesla’s market capitalization fell to below $500 billion for only the first time since November 2020. This drop was not helped by Musk’s sale of 22 million Tesla shares, which were worth approximately $3.6 billion.

Chris Beauchamp is chief market analyst at IG. “If you take a look at the share prices it continues to decline,” Beauchamp said. “I believe the markets think that the person who drove this company where it is today has lost sight of the goal.

Tesla is also affected by Twitter’s debt problems

Musk has now sold around $23 billion worth of Tesla shares since the announcement of the Twitter takeover. This is a testament to the magnitude of his gamble in buying Twitter, which he probably realized after trying unsuccessfully to back out.

The deal includes equity from Sequoia Capital as well as the Qatar Investment Authority. It is also financed with $13 billion of debt by a syndicate of banks, including Bank of America, Morgan Stanley and Barclays.

Ives, an analyst at Wedbush, stated that the Twitter nightmare continues. Musk is using Tesla to fund the red ink at Twitter. This was published in an analyst note on 14 December.

This red ink was not as problematic when interest rates were low and Tesla’s shares were rising. It was much easier to use Tesla stock for the wild bet Musk made earlier in the year, when he proposed buying Twitter for $44 Billion.

Tesla is facing a problem because the Federal Reserve has increased interest rates aggressively to curb inflation. Tesla cannot use Tesla stock to pay the debt for the Twitter buyout.

Beauchamp stated that it was a significant burden on the company because it will become more costly or more likely to be more expensive. It’s another thing to be concerned about.

Musk’s self-capitulation in full swing

Musk appears to be acutely aware of the adverse effects of the wider economic downturn. He tweeted on December 13: “Beware of debt in turbulent macroeconomic circumstances especially when Fed keeps increasing rates,” just before the news about his Tesla stock sale became public.

Gerber also attempted to defend the $600 billion loss in Tesla market value, blaming Fed. Gerber responded that Tesla is “executing better than ever” but that he didn’t control the Federal Reserve.

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Tesla’s problems go beyond that. The company has underperformed the NASDAQ in 2022. This year, a wide range of tech companies have faced the same headwinds, but not the same plunges in stock prices. Beauchamp stated that Tesla is a stock so closely associated with Elon Musk. It stands or falls because it is Elon. The poll results were positive for Tesla, and the stock price rose almost 5% on Monday.

Twitter’s chief has suggested that he would seek out someone to take over Twitter. The social media company has been run by some close friends, including Lex Fridman (computer scientist and podcaster)

Musk is clear about how big a task it would be. He’s already failed to complete several plans, including a verification subscription plan, a decision-making process that banned journalists and an apparently arbitrary one regarding removing advertisers from the platform.

He tweeted Sunday: “No one wants to be a Twitter-manipulator.” There is no successor.

Business Insider has the original article.
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By: hchowdhury@insider.com (Hasan Chowdhury)
Title: Elon had to choose between Twitter and Tesla. He’s choosing Tesla.
Sourced From: www.businessinsider.com/elon-twitter-ceo-stepping-down-tesla-stock-2022-12
Published Date: Mon, 19 Dec 2022 15:22:08 +0000