Elon Musk’s X is subtly hurting Tesla
Tesla, Elon Musk’s electric car company worth about $800 billion, was continuing to operate. The stock has more than doubled in value this year, even as Musk has sparked controversy and a mass exodus of advertisers with his actions and remarks related to Platform X, formerly known as Twitter.
But more broadly, Tesla faces a difficult mix of hurdles, from intensifying competition as legacy automakers scramble for share of the electric vehicle market, to uncertain demand for electric vehicles and persistent concerns about charging infrastructure. Margins are declining. Regulators are also examining claims about self-driving capabilities and the electric vehicle range.
How can a CEO effectively lead a company through such turmoil while spending so much thought on a disconnected, faltering business?
“What’s the use of X in Tesla’s business?” said David Trainer, CEO of New Constructs, an investment research firm. “He has hired a CEO to run it, and I see no downside to him stepping down 100%.”
In fact, in Trainer’s view, Tesla stock would likely rise if Musk announced he was leaving X.
Musk’s financial entanglements also pose risks to Tesla shareholders.
“It’s hard to think of many CEOs who are more the face of the company and the brand than Elon Musk is to Tesla,” said Garrett Nelson, vice president and chief equity analyst at CFRA Research. “For example, if X’s advertising revenues declined significantly and Musk needed to sell more Tesla shares to provide financing for X, that would impact Tesla’s stock price,” he said.
For now, Wall Street is looking beyond Musk’s X-related drama.
“Devoted student. Bacon advocate. Beer scholar. Troublemaker. Falls down a lot. Typical coffee enthusiast.”