Tesla downgraded over Elon Musk’s Twitter antics

In a move proving to be embarrassing for Elon Musk, Oppenheimer & Co downgraded its rating on Tesla, citing risks posed by the billionaire’s ownership and management of Twitter.

The development comes after Musk’s management of Twitter, including the banning of multiple journalists, has “severely damaged” market sentiment around Tesla, and risks sparking a backlash from advertisers and consumers.

According to Oppenheimer & Co analyst Colin Rusch, Musk – Tesla CEO – is increasingly isolated as the steward of Twitter’s finances with his user management on the platform. “We see potential for a negative feedback loop from departure of Twitter advertisers and users,” he wrote to clients.

An exodus of advertisers will only further erode Twitter’s finances and force Musk to unload even more Tesla stock to cover the cash hole, the firm wrote.

It specifically mentioned Twitter’s decision last week to ban several journalists as a catalyst for the downgrade.

Rusch also said that “inconsistent standards application” for Twitter users had helped create a “broad public backlash” against Musk that will in turn hurt Tesla.

“We believe banning journalists without consistent defensible standards or clear communication in an environment where many people believe free speech is at risk,” Rusch said

It was too much for a majority of consumers to continue supporting Musk and Tesla, particularly people ideologically aligned with climate change mitigation, he added.

In other words, Musk’s antics are bad for business, even the business of Tesla whose shares have plunged by about 58 percent since Musk disclosed his stake in Twitter.

Ross Gerber, a shareholder in both Twitter and Tesla, said over the weekend that he hopes Musk finds a CEO for Twitter during the first quarter of 2023.

“I think it is in the best interest for Tesla shareholders for Elon to be back at Tesla working full time,” Gerber said on Twitter.

Earlier, Sen Elizabeth Warren wrote to the chair of Tesla’s board, Robyn Denholm, expressing concern that Musk has possibly violated his legal duties to Tesla since he bought Twitter for $44 billion and that the board has failed in its duties to protect the company by not reining him in.

″Every Board of Directors of a company with multiple shareholders – especially publicly traded companies – is responsible for ensuring that a controlling shareholder (especially one who is also a Chief Executive Officer, or CEO) does not treat the company as a private plaything,” Warren wrote in a letter on Sunday.

The story was filed by the News Desk. The Desk can be reached at info@thecorrespondent.com.pk.


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