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The central theses
- Elon Musk took control of Twitter in late October.
- Since then he has made a series of controversial changes at the company.
- He’s been involved in various antics lately, including publicly voting on major changes to the platform as Tesla stock continues to tumble.
Since Elon Musk took control of Twitter, the platform has seen many changes and user complaints. Many feel that Musk is hurting the platform, and some have taken a stand and already switched to competitors.
His recent antics, which he posted publicly on his Twitter account, have worried investors in his other companies, including Tesla. Here’s what you need to know.
background
Elon Musk took control of Twitter in late October after a lengthy takeover process. He offered to buy the company, declined the offer, and eventually completed the purchase for $44 billion.
He immediately made major changes in the company, firing top executives and laying off half of the company’s employees.
Within a week, Musk began charging for Twitter Blue and gave his subscribers a blue tick on their accounts. This feature was previously only made available to verified accounts of high profile users such as journalists and celebrities.
In the weeks that followed, he continued his controversial decisions, urging employees to be part of his revamped Twitter 2.0, and committing to long hours and fast-paced work. He also unbanned former President Trump and Kanye West, among others.
Elon Musk’s Twitter antics
In addition to his decisions regarding the management of the company, Musk has been very vocal on Twitter.
Before unblocking Donald Trump and other controversial accounts, he pitched the idea of a poll. When users voted to lift the ban, Musk tweeted “Vox Populi, Vox Dei” before reversing the bans.
This was one of the first times Musk surveyed Twitter’s management decisions among its users. He recently asked users to vote on whether he should step down as Twitter boss. Currently, more than half of the respondents have voted yes.
Musk has also used the platform to promote conspiracy theories and discrimination against various groups.
For example, he tweeted (and later deleted) links to a conspiracy theory about the violent attack on Paul Pelosi, husband of House Speaker Nancy Pelosi. He also promoted ideas against vaccination and discrimination against transgender people.
Journalists have criticized Musk for the recent bans. He banned accounts he claims shared his real-time location. However, critics argue that he included many non-criminal accounts in the ban. Most of these accounts belonged to journalists with negative opinions about Musk.
Of concern to advertisers is Musk’s public stance on advertising. He tweeted, “I hate ads,” and appears to want to make the platform less dependent on ad revenue.
Its most recent decision was to ban links to other social media platforms, including Facebook or Instagram. This drew immediate backlash as many users on Twitter rely on these other social media platforms for revenue.
Within hours of the backlash, Twitter conducted a poll to ask if they should reverse the decision, with an overwhelming majority voting yes.
In short, Musk has made a number of highly controversial decisions and appears willing to subject the administration of his massive website to a popular vote. He doesn’t appear to be serious about running Twitter and is happy to weaken moderation on the site.
How and why it affects Tesla
When Musk bought Twitter, he took the company private, meaning his antics haven’t impacted Twitter investors other than himself.
However, as a high-profile leader of other public companies, his actions have a significant impact on the performance of companies like Tesla.
Analysts have spoken of “fears the Twitter circus show is going off the rails” and that Musk has gone from “superhero to villain” in the eyes of (Wall) Street.
Musk has sold a large chunk of his stake in Tesla, about $22.9 billion in shares, since buying Twitter. This massive sell-off has caused Tesla to fall.
Combined with Musk’s public mismanagement of Twitter, the selloff has caused some Tesla investors to question his ability to successfully keep Tesla running. Others worry he’s too focused on Twitter and not spending enough time with Tesla.
Tesla has acknowledged this concern in its filings, saying, “We are highly dependent on the services of Elon Musk, Tesla’s Technoking and our Chief Executive Officer. Although Mr. Musk spends a significant amount of time at Tesla and is very active in our management, he does not devote his full time and attention to Tesla.”
Tesla stock is down about 65% this year and down about 33% since Musk bought Twitter.
What it means for investors
Tesla investors are undoubtedly concerned about the company’s fate due to Musk’s recent Twitter antics and his massive holdings in the company. Musk used to be the richest man in the world and is now number two on the list, largely due to Tesla’s falling share price.
Musk holds most of his wealth in Tesla stock. Investors fear he may be forced to sell more shares to keep Twitter running if advertisers leave the site.
Musk is also the target of several lawsuits filed with Twitter and Tesla. One of the lawsuits concerns a $50 billion payment he received from Tesla in 2018 in compensation. Losing those lawsuits could have significant financial implications for Musk and Tesla.
Given that Musk’s wealth is closely tied to Tesla’s success, some investors might feel confident that he won’t let the company fail.
bottom line
Twitter has been on a roller coaster of changes since Elon Musk took control of the company in October. This has affected Musk’s other holdings, most notably Tesla, and many investors are unsure how things will play out.
Only time will tell if Musk can fix the ship on Twitter and stabilize the situation at Tesla.
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