Stock Falls 30% As Tesla Investors Urge Musk To Let Go Of Twitter

Recently, the news that Tesla CEO Elon Musk is buying Twitter has upset Tesla investors. Since Musk announced his large stake in Twitter, Tesla shares have fallen by a cumulative 30%. Some Musk and Tesla fans worry that the acquisition of Twitter will make Musk even more exhausted.

  Musk's announcement to buy personal social media Twitter's plan not only angered a group of executives and employees at Twitter, but also frustrated many die-hard Tesla fans.

  Since April 1 of this year, the farce about Musk's investment in Twitter stock and whether he is ultimately willing to come up with $44 billion to buy it has intensified, and Tesla's market value has evaporated about 30%. By comparison, the Nasdaq Composite Index, which is dominated by technology stocks, is down about 15 percent over the same period.

  The incident has some of Musk's fans worried that he may not be able to keep up with it at all. In addition to Tesla, Musk also runs rocket company SpaceX, and is involved in founding tunnel digging business Boring and a neuroscience startup researching brain-computer interface technology. Now add Twitter to the mix, and many Tesla supporters worry that Musk may be distracted.

  "I hope he quits," said Gary Black, managing partner of fund management firm Future Fund. Black's firm owns about $50 million worth of Tesla stock. A Tesla backer, Black said he thinks the acquisition of Twitter will distract Musk, which could take up more of his time.

  One person who follows Tesla closely recently advised Musk on Twitter, "Elon, Twitter is an unnecessary distraction. Just focus on Tesla."

  Musk, for his part, has been trying to quell such concerns. "To be clear, I spend less than 5% of my time actually acquiring tweets. It's not rocket science!" He tweeted last week, "I think about Tesla all the time."

  Tesla did not return a request for comment.

  There has been concern that Musk may be taking on too much responsibility. He has built Tesla into the world's most valuable automaker, while also running the rocket company SpaceX.

  But Tesla investors have struggled to digest Musk's repeated efforts to buy out Twitter. April 1 was the last trading day before Musk disclosed his substantial stake in Twitter, and on April 25 Twitter announced it was accepting Musk's offer, during which Tesla shares fell about 8 percent and the Nasdaq Composite Index fell about 9 percent over the same period.

  But then Tesla began a sustained plunge. In the days after announcing his intent to enter into a deal with Twitter, Musk sold about 9.6 million shares of Tesla stock, worth about $8.5 billion. Then, as Tesla's stock continued to fall, Musk said he was "temporarily putting" the acquisition on hold because of concerns about fake accounts on the platform. He stressed at the time, however, that he remained committed to completing the acquisition.

  Twitter, for its part, said it was moving forward with the deal as agreed.

  Musk's fortune is made up mostly of Tesla stock. He disclosed last Wednesday that he no longer plans to use the margin loan obtained by pledging Tesla shares to finance the acquisition of Twitter. He instead pledged to increase the amount of equity acquired, saying he is looking to bring in more outside funding for the Twitter acquisition.

  The recent drop in Tesla's share price has prompted investors such as Black to pressure Tesla to buy back shares 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 stock buyback. In April, when asked about future Tesla cash use plans, Chief Financial Officer Zachary Kirkhorn (Zachary Kirkhorn) said the company is investing in new factories and new products.

  It is unclear whether the comments of some die-hard 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 person, which makes him even more of a controversial person," said Banning, a Tesla fan who frequently interacts with Musk on Twitter. The decision to acquire Twitter, however, did not prompt Banning to sell his Tesla stock.

  "Elon is still Elon," Banning said. "I think, as a long-term shareholder, the stock price will go back to where it should be because they're running. They're selling cars, and they're profitable."

  Tesla reported record first-quarter profit of $3.3 billion.

  Musk's acquisition of Twitter isn't the only issue Tesla investors have to digest. Supply chain bottlenecks are also limiting sales of Tesla cars. According to analysts, Tesla will deliver about 292,000 cars worldwide in the second quarter of this year, down from 310,000 in the first quarter. This means Tesla's first year-over-year decline in shipments in more than two years.

  It was also recently reported that in 2018 SpaceX paid a flight attendant $250,000 to settle sexual assault allegations against CEO Musk. Musk responded by saying the allegations were "completely untrue."

  Gwynne Shotwell, president of SpaceX, told company employees in a subsequent email that she personally believed the allegations against Musk were false. Shotwell, however, did not mention whether the company paid the settlement. She said in the email that SpaceX would not tolerate harassment of any kind.

  Some Tesla supporters, on the other hand, see an opportunity in the falling stock price. John Stringer, who runs a Tesla owners club in Silicon Valley, said he has increased his own holdings in Tesla in recent weeks.

  Stringer said of Musk's unpredictable tweets and attempts to juggle several companies at once, "That's the hallmark of the industry he's running."



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