Yesterday, at some point while Elon Musk was flying around the world to hobnob with his bud Jared Kushner at the World Cup, he seemed to have second thoughts about his twitter lunacy. He pulled back some of the authoritarian edicts he’d issued earlier in the week and put up a poll asking if he should step down from CEO, which he promised to adhere to. He lost, but we don’t know why he did it in the first place.
This piece by William Cohan in Puck probably explains it:
Elon Musk just sold another chunk of Tesla stock, presumably to strengthen his position at Twitter. This is already a problem for Tesla shareholders, a big problem. Tesla stock is down a whopping 62 percent so far in 2022. So basically ever since Elon started his campaign for Twitter, which began in January with his first quiet purchases of Twitter stock, Tesla shareholders have been huge losers, even as Twitter’s shareholders, aside from Elon and those that rolled their Twitter stock into Elon’s private Twitter, such as Jack Dorsey and Prince Alwaleed, have been the big winners. Essentially Elon has transferred a bunch of his personal wealth via Tesla shareholders to many of the Twitter shareholders, or at least those who decided to take his generous offer of $54.20 in cash.
To make matters worse, Elon keeps selling Tesla stock—even after he said he wouldn’t sell anymore stock (does this kind of thing interest the S.E.C.?)—presumably to get enough cash to either make the $600 million interest payment to the Twitter banks in April 2023 or to have the $6.5 billion in cash he would need to pay the Twitter banks out at 50 cents on the dollar. Regardless, not only has Twitter become an operational and financial disaster, Elon has managed to drag Tesla and the Tesla shareholders into the Twitter debacle as well, if for no other reason than it’s just not a good fact pattern when the C.E.O. and largest shareholder keeps selling stock even after he says he won’t sell any more stock.
Some Tesla shareholders are already making clear their desire for Elon to return his focus back to Tesla, and give up his obsession with Twitter. And one other point, Elon seems to be asking investors in Twitter to pony up more equity for Twitter at the original purchase of $54.20 a share. Considering that the equity of Elon’s Twitter is probably zero at this point, or close to it, do I really need to say how insane it would be for those shareholders to pony up more money for this travesty of a deal? Does Elon really think anyone will sign up to put more money in this deal at the original price? My mind is blown.
What’s going on at both Tesla and Twitter shows explicitly the dangers of an absolute monarchy and what happens when corporate governance goes out the window. Neither company seems to have any independent leadership at either the management or the board levels; it’s all the Elon Musk show and it’s not a hit. It’s an unmitigated disaster if you ask me. When we are supposed to be living in an age where ESG is all the rage on Wall Street and in boardrooms, the governance snafus at both Tesla and Twitter prove definitely that we’re not, and that something is very wrong in situations like Tesla, Twitter, Snap (down 82 percent this year) and Meta (down 64 percent year-to-date), where one person controls the fate of tens of thousands of others, without any carburetor on their behavior. If I were a shareholder of Twitter, Tesla, Snap or Meta, I’d be mighty pissed right now.
There is some talk that he got some angry whispers in his ear on his little visit to the middle east from some of his Saudi twitter investors but we don’t know that. The Tesla stuff is informed speculation that I think is probably correct. The shareholders aren’t going to sit still for his hijinks forever.
He hasn’t commented on the poll today. He’s released a bunch more “twitter files” gobbldygook which has the wingnuts all aflutter about the CIA, Big Media and Big Tech conspiring to keep their hero Donald Trump out of the White House by suppressing Nazis, Russians and Hunter’s dick. Yeah, whatever. (Note that Musk hanging out with Trump’s son-in-law and a bunch of Saudi big shots doesn’t even raise an eyebrow.)
I think Musk actually may be realizing that his massive fortune could be at stake here. We just watched FTX founder Sam Bankman-Fried go down hard so it can happen. He may just decide he needs to mind the real store and put someone who has some experience with this particular field to run twitter. We’ll see.
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