The soaring stock price in the past few years made Musk the world’s richest man, and the board of directors and investors also tolerated Musk’s sky-high salary and options. However, since Musk entered Twitter and focused all his energy on his unpopular Twitter reform, Tesla’s stock price has plummeted continuously, and investors finally can’t sit still…
Author | Lee Hyun-hwan
Editor | Sun Chunfang
Source | City Boundary
Musk, once the richest man, is facing more and more doubts, whether as the CEO of Twitter or as the CEO of Tesla.
Last week, a poll conducted by Musk himself on whether he should resign as the head of Twitter showed that more than half of the people supported his resignation.
At almost the same time, Indonesian billionaire Liao Kaiyuan (KoGuan Leo), Tesla’s third natural shareholder, publicly called for Musk to step down as Tesla CEO. The investor holding more than $3 billion in Tesla shares represents the views of many investors: I hope Tesla can usher in a full-time CEO instead of focusing on Twitter like Musk.
Investors can only try to convince themselves that the CEO still cares about the company in Musk’s few words. At this stage, it seems that as long as Musk cares about Tesla, it can be good news for the stock price.
After the U.S. stock market closed on Thursday, Musk said in a voice chat on Twitter Space that the U.S. economy will usher in a severe recession in 2023, which will lead to a decline in market demand for cars. At the same time, he stressed that “under no circumstances” would he sell Tesla shares in 2023. “That is, in the long run, Tesla will be the most valuable company in the world.” Musk said.
Once this remark was made, the stock price rose by nearly 3% in after-hours trading. But this still cannot change the fact that Tesla is still breaking through the new low of stock price in the past two years, and its market value has shrunk by nearly 70% within the year.
Once, Musk was a popular technology madman. People liked him for launching rockets, creating the impossible, taking Tesla’s stock price all the way to the sky, and making a lot of investors rich.
After taking the helm of Twitter, Musk said that he didn’t want to manage any company, but he was actually obsessed with vigorously “renovating” Twitter. At the same time, he ignored Tesla. The two companies suffered from Musk’s willfulness. Suffering from his management style, the American tycoon is having his most unpopular moment.
Entering Twitter, Musk chooses to offend everyone first
On the afternoon of December 21, US time, Musk tweeted, “As long as I find someone stupid enough to take this job, I will resign as (Twitter) CEO immediately. After that, I will only be in charge of software and servers. team.”
Two days ago, Musk had just learned through the voting results: 57.5% of Twitter voting users wanted him to resign as the head of Twitter.
At this time, it was less than two months since Musk took office as CEO of Twitter.
Several U.S. business consultants said the billionaire’s approach differed from that of nearly all corporate executives. Under normal circumstances, even if a newly appointed person in charge of a company wants to guide the company’s strategic transformation, it will take three months to meet with executives and employees, at least to find out the company’s situation before taking the lead.
But the wayward Musk will not play his cards according to common sense. Soon after the new official took office, he set off a few big fires: more than half of the employees were laid off, and the board of directors was dissolved immediately. These measures were not only unpopular within the company, but also offended. Twitter users and advertisers.
The Twitter turmoil began on Musk’s first day in the office.
(Source: Visual China)
On October 26, Musk walked into Twitter’s San Francisco headquarters building with a heavy sink. The new boss, who had just spent $44 billion on the acquisition of Twitter, immediately began a drastic transformation.
On the same day, Musk disbanded Twitter’s board of directors, and core executives such as the former Twitter CEO, CFO, and legal counsel left the company collectively within a day, taking away hundreds of millions of dollars in severance pay.
A week after taking over Twitter, Musk began his big layoffs. Thousands of employees resigned collectively in one day, saying goodbye to this social media company known in Silicon Valley for its generous treatment and good working atmosphere.
It is reported that in the three weeks from Musk’s entry into the company to late November, the number of Twitter employees has been reduced from more than 7,500 to less than 3,000, and the scale of layoffs is close to two-thirds.
Even Twitter users are not the object of Musk’s fear.
On December 15, Twitter suddenly froze the accounts of several well-known American media reporters. The reason given by Twitter is that these accounts are suspected of publishing Musk’s real-time location, which violates Twitter’s latest privacy policy.
But this behavior of silencing journalists by taking advantage of the convenience of running Twitter has been widely opposed. The results of the poll initiated by Musk later showed that 58.7% of the 3.7 million people who participated in the survey supported the immediate restoration of the blocked reporter’s account.
Two days later, Twitter announced the unblocking of the accounts of these journalists.
Advertisers were also quickly offended by Musk. Before he took over Twitter, placements from major advertisers contributed more than 90% of Twitter’s revenue. After Musk took over, major advertisers such as Pfizer, L’Oreal, and United Airlines have suspended their tweets.
Musk’s embarrassing status in the automotive industry has also made other car companies hesitate to post on Twitter. Car companies such as General Motors, Ford Motor, Audi of America and Volkswagen have scaled back their Twitter presence given Musk’s role as Tesla CEO.
This result is no different from Twitter, which is eager to improve its financial performance. According to media reports, Twitter’s original revenue target for the fourth quarter was US$1.4 billion, which was already lower than the US$1.6 billion in the same period last year. Proceeds are targeted at $1.1 billion.
Does Twitter CEO care about Tesla?
While Musk was fighting with users on Twitter, Tesla’s stock price has been dropping all the way, continuing to set new stock price lows this year.
On Thursday, U.S. time, Tesla’s stock price plunged 8.8% in one day, and on Tuesday two days ago, Tesla just plunged 8.1%. For reference, the S&P 500 index rose 0.1% that day, and the Dow Jones Industrial Average rose 0.3%.
A one-day drop of this magnitude seems to be commonplace for Tesla investors.
But the trouble is that investors don’t seem to have seen the low point of Tesla’s stock price. As of Thursday, US time, Tesla’s stock price has fallen by 68% this year, and its market value has evaporated by more than 700 billion U.S. dollars.
As Musk’s main asset, the continuous decline in stock prices has also caused Musk’s personal assets to shrink by more than 100 billion U.S. dollars, and his position as the world’s richest man has also been lost.
Investors’ worries come from the market on the one hand. As interest rates rise and the overall price of the automobile market rises, the market demand for electric vehicles will be compressed. It is expected that Tesla’s sales growth will slow down in 2023.
The more uncertain factor is Musk himself.
Since acquiring Twitter, the former richest man has devoted almost all of his attention to his new company.
Daiwa Securities analyst Jairam Nathan will lower Tesla’s target stock price to $177 this week. The analyst said: “The disruption from Twitter and the weak macro environment will be reflected in Tesla’s performance expectations. and stock valuations.”
Goldman Sachs analyst Mark Delaney also warned that after Musk acquired Twitter, he devoted more and more energy to Twitter and dabbled in political topics, which would have an extreme impact on Tesla’s brand.
Of course, Musk never thought that the problem was with him. In explaining Tesla’s stock price recently, Musk said part of the decline was due to macroeconomic factors, and said that as risk-free bank savings rates begin to approach stock market returns, people will increasingly move their money out of the stock market. The stock market withdraws cash, which causes the stock market to fall.
But the data shows that the acquisition of Twitter is still a key watershed in the rise and fall of Tesla’s stock price.
Before the announcement of the acquisition of Twitter, Tesla shares fell about 36%. During this time, the performance of the broader market has been fairly consistent, with the Nasdaq Composite index down 31%. Ford and GM, both in the auto sector It was also down about 35%.
However, after the announcement of taking over Twitter, Tesla’s stock price continued to fall by about 59%, but the S&P 500 index fell only 14% during the same period, and the stock prices of GM and Ford fell by 26% and 12%, respectively. Only Tesla’s stock price is still plummeting all the way down.
A market report pointed out that after Musk took control of Twitter, Tesla’s decline came from three major factors: 1. Musk sold Tesla’s stock; 2. Musk’s attention to Twitter caused management distraction; 3. Musk The tweets are damaging to Tesla’s brand.
A report from Wedbush Securities, a securities company, pointed out that what may annoy Tesla investors the most is that Musk has sold nearly $40 billion in shares since last year. Tesla is used as an ATM machine, which poses a huge threat to Tesla’s stock price.”
Use Tesla as an ATM
According to Bloomberg News, in the three days from December 12 to 14, Musk sold nearly 22 million Tesla shares at a price of US$3.58 billion.
Counting this time, the former richest man has sold his own stocks for the fourth time this year. Also this year, Musk has twice promised not to sell Tesla shares-but both promises have been broken one by one.
In fact, the corporate tycoon has been flipping money back and forth between companies.
For example, before starting SpaceX and investing in Tesla, Musk’s funds were mainly obtained through the sale of PayPal.
In the growth stage of SpaceX and Tesla, it is no secret that Tesla batteries were moved to the SpaceX factory, and SpaceX engineers were invited to Tesla’s office to help solve engineering problems.
And when Tesla grew into the world’s most valuable car company, Musk’s withdrawal became easier and faster. In 2021, Musk exercised more than 2.15 million Tesla stock options at a price of $6.24 each because of tax payments, and then sold 934,000 Tesla shares after the exercise.
Data show that in 2021, Musk sold a total of more than 20 million shares of Tesla before the stock split, cashing out nearly US$22 billion.
(Source: Visual China)
For a long time, Tesla investors have not been disgusted with CEO Musk’s behavior of selling stocks for cash, but only if Tesla’s stock price is good enough.
In the same way, as long as the stock price rises, it is understandable for Musk to get more salary.
Musk has been taking a huge salary from Tesla for several years.
In January 2018, Tesla formulated a ten-year compensation plan for Musk. It set 12 stock price targets, each $50 billion higher than the last. Starting from US$100 billion to US$650 billion, as long as Tesla’s market value crosses a level, Musk, as CEO, can unlock an income.
If Tesla’s market value reaches $650 billion, Musk will unlock $56 billion in option earnings.
The purpose of Tesla’s board of directors in formulating this compensation plan is to worry that Musk will shift the focus of his work to SpaceX, and even quit Tesla’s management because of this. The board said at the time: “We hope to motivate Musk to continue leading Tesla to achieve its long-term goals, while devoting more time and energy to Tesla.”
It is precisely because of this salary incentive plan and the soaring of Tesla’s stock price in the years before 2022 that Musk has held the world’s highest CEO salary for 4 consecutive years.
But with Tesla’s stock price plummeting 60% this year, investors can no longer sit still, especially since the CEO with a sky-high annual salary is now focusing his attention on Twitter.
So Tesla’s third natural shareholder, Indonesian billionaire Liao Kaiyuan, publicly called for Musk to step down as Tesla CEO.
In fact, he is not pessimistic about Tesla and Musk. This loyal follower of Musk is a long-term supporter of Tesla. The ratio is second only to Musk and Oracle founder Ellison.
“I invested in Tesla because of Musk. I wanted him to continue as CEO, but he abandoned Tesla.” Liao Koyuan said that Tesla needs a full-time CEO.
Ross Gerber (Ross Gerber), an important institutional shareholder of Tesla who once supported Musk’s acquisition of Twitter, and CEO of the Gerber Kawasaki Fund Company, recently pointed out in a tweet that SpaceX has a strong leader-President and COO Gwen Shotwell, who at the company is responsible for communicating with customers such as NASA and communicating with employees when problems arise. He believes that Tesla’s dilemma is that there is no real CEO in charge.
“If the Tesla Board of Directors declares someone to be interim CEO of Tesla, the stock decline will end,” Gerber tweeted. “Simple as that.”
(Disclaimer: This article only represents the author’s point of view, not the position of Sina.com.)
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