Carina Johansen/Getty Images; Jeremy Moeller/Getty Images
- Elon Musk has been forced to make a tough choice: Tesla or Twitter.
- The billionaire has faced pressure from Tesla shareholders over his role at Twitter as shares have fallen.
- In a poll, more than 17 million people said Musk should step down as Twitter CEO.
Perhaps he was caught up in the euphoria of it all. But after spending the World Cup final in the stands of Qatar’s Lusail Stadium on Sunday with one Jared Kushner and a gang of Gulf sheiks, Elon Musk decided to put a poll up on Twitter asking if he should stand down as CEO.
After more than 17 million people cast their votes, the verdict is in: a majority of 57% think the billionaire Twitter owner should step aside. Musk said he would “abide by the results of this poll,” prompting speculation about an imminent resignation and suitable replacement candidates.
The poll came moments after Musk issued a mea culpa for introducing a new Twitter policy barring users from posting links to their profiles on rival social media sites such as Instagram, Mastodon, and Nostr – a move that sparked fury from users. Twitter deleted the policy after less than 12 hours.
In an analyst note on Monday, Dan Ives, managing director of equity research at Wedbush Securities, said the poll’s results are not a surprise “given that since Musk has taken over Twitter in late October it’s essentially been a debacle of epic proportions.”
But the poll ultimately comes as Musk needed to decide which company to run: Tesla or Twitter. His electric vehicle company got hammered last week by both analysts and shareholders, forcing him to choose which he wanted more.
He’s picking Tesla, which represents nearly alf his $156 billion in estimated wealth, and the Twitter poll gave him a handy escape pod.
Tesla under pressure
Musk has faced questions about how he manages more than one compan for as long as he has been in the spotlighty. Overseeing Tesla, SpaceX, the Boring Company, or Neuralink alone would be enough to keep even the most sure-footed CEO busy.
When Twitter was added to the mix, Tesla backers were rightly concerned about yet another responsibility falling on Musk’s shoulders. Those concerns coming to a head last week.
On December 14, Tesla’s third-largest individual shareholder Leo KoGuan tweeted his frustrations with Musk, suggesting that he “abandoned Tesla and Tesla has no working CEO.” He said Musk should find a successor with independent supervision from the board of directors.
—KoGuan Leo (@KoguanLeo) December 14, 2022
Ross Gerber, a fellow Tesla shareholder and CEO of Gerber Kawasaki Wealth and Investment Management, tweeted on Saturday that “it is in the best interest for Tesla shareholders for Elon to be back at Tesla working full time.”
The frustrations are warranted. Tesla’s market capitalization has tumbled to less than $500 billion for the first time since November 2020, a drop that wasn’t helped by Musk selling off 22 million Tesla shares worth around $3.6 billion last week, according to SEC filings.
“If you look at the share price it continues to suffer,” said Chris Beauchamp, chief market analyst at IG. “I think the markets are thinking, ‘The person who drove this company to what it has got to has now taken an eye off the ball.'”
Twitter’s debt problem impacts Tesla too
In total, Musk has sold off around $23 billion in Tesla shares since announcing the Twitter takeover, as the size of the gamble he has made in buying Twitter – one he likely realized after trying to back out of the deal — has become more apparent.
Along with equity from investors including Sequoia Capital and the Qatar Investment Authority, the deal is financed by $13 billion of debt from a syndicate of banks including the likes of Morgan Stanley, Bank of America, and Barclays.
In an analyst note published on 14 December, Wedbush’s Ives said that “the Twitter nightmare continues as Musk uses Tesla as his own ATM machine to keep funding the red ink at Twitter which gets worse by the day.”
That red ink wasn’t as much of a problem when interest rates were low, and Tesla’s shares were soaring. It was easier to use Tesla stock to fuel the kind of wild bet Musk made earlier this year when floating the idea of buying Twitter for $44 billion.
But as the Federal Reserve has aggressively hiked interest rates to curb inflation, using Tesla stock to pay off the debt on the Twitter buyout is a problem for Tesla.
“It’s a major burden for the company, because it will get more expensive, or likely more expensive,” Beauchamp said. “It’s something else to worry about.”
Musk’s self-capitulation is in full motion
Musk seems painfully aware of the negative impacts of the wider economic downturn, tweeting on December 13 to “beware of debt in turbulent macroeconomic conditions, especially when Fed keeps raising rates,” shortly before news of his sale of Tesla stock became public.
He has also tried to defend the erasure of around $600 billion in Tesla market value by blaming the Fed. Responding to Gerber, he said that “Tesla is executing better than ever,” but “we don’t control the Federal Reserve.”
However, Tesla’s challenges go beyond this, with the company underperforming the NASDAQ significantly in 2022, which has seen a broad range of tech businesses facing the same headwinds but without the same plunges in stock price.
“Tesla is so much an Elon stock, it stands or falls because of him,” Beauchamp said. Tesla’s stock price responded positively on Monday to the poll’s results, rising almost 5%.
The Twitter chief has previously suggested he’d seek to find someone else to run Twitter in due course. Some close allies, such as computer scientist and podcaster Lex Fridman, have volunteered to run the social media company.
But Musk seems clear on how tall a task he’d be handing over, having botched several plans already, such as a new verification subscription plan and a seemingly arbitrary decision-making process on banning journalists, all while seeing advertisers flee the platform.
On Sunday, he tweeted: “No one wants the job who can actually keep Twitter alive. There is no successor.”