Tesla is as big or bigger than the world’s biggest companies, but doesn’t have the same management infrastructure as other companies, investors say
Tesla is as big or bigger than the world’s biggest companies, but doesn’t have the same management infrastructure as other companies, investors say
Elon Musk’s move to buy Twitter for $44 billion has raised concerns about the depth of executive talent at his more valuable company, electric car maker Tesla Inc., if his attention is further divided by the social media platform.
Announcing the deal on Monday, Mr Musk called Twitter the world’s “digital town square” and talked about protecting freedom of expression, but he also rekindled fears that a man who once owned a Model 3 sedan Was admitted to sleeping on the factory floor during the launch. And speaking of working “crazy hours” last year, there’s only so much energy to spare.
“Tesla, despite being a trillion-dollar company, feels like a start-up,” said Tesla investor Ross Gerber, chief executive of wealth management firm Gerber Kawasaki. “It’s as big or as big as the world’s biggest companies, but it doesn’t have the same management infrastructure as other companies.”
On top of that, Tesla is rushing to boost production at new plants in Texas and Berlin amid supply-chain shocks and high raw material costs, as well as its biggest one in Shanghai during the spike in COVID-19. Working to get back to work in the factory. there cases. Mr Musk said in January that Tesla has a lot on its plate and will not introduce new models like the Cybertruck this year.
Tesla has managed to address its problems, but Twitter’s shift in focus worries investors.
“I’m afraid it will be a distraction,” said a fund manager with a key position at Tesla. “He’s juggling supply chains and factory delays and expanding the energy storage business and it doesn’t fit at all.”
Tesla shares have fallen 8% since Musk first disclosed his initial stake in Twitter.
Tesla could not be reached for comment, but a company insider who asked not to be identified said investor concerns were “overdone” and that Mr. Musk was still heavily engaged in the automaker.
Mr Musk also leads rocket company SpaceX as well as brain-chip start-up Neuralink and the tunneling venture of The Boring Company.
Tesla has seen executive turnover in 2019 before the departure of co-founder JB Straubel and President Jerome Guillen last year.
Tesla, founded in 2003, has grown into the most valuable automaker, but the company’s website lists only two executives with Musk, compared to 17 at General Motors and 11 at Volkswagen.
Tesla’s current high-profile leadership outside Mr. Musk includes Chief Financial Officer Zachary Kirkhorn and Senior Vice President Andrew Baglino, who handles powertrain development. Both investors are best known by their appearance on Tesla’s quarterly earnings conference call.
Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, who holds a limited number of Tesla shares in the accounts he manages, wondered whether Musk would install someone else to lead Twitter.
“It seems like it would be the most logical thing to do,” he said. “It’s like he has his hands full of Tesla and SpaceX.”
Mr. Gerber said perhaps Mr. Musk needs a strong No. 2 executive like he has at SpaceX with President Gwynne Shotwell.
Ian Beavis, chief strategy officer at auto consultancy AMCI, worries that Mr Musk’s purchase of Twitter, along with controversies over political and social issues, could harm the Tesla brand.
Some investors remain concerned about Mr Musk’s plans, which is worth $268 billion according to Forbes, to finance the Twitter deal. Twitter said Mr. Musk secured $25.5 billion in debt and margin debt financing and is providing an equity commitment of $21 billion. It is unclear whether Mr Musk will sell shares of Tesla to help fund the deal.
According to the Tesla filing, Mr. Musk owns 172.6 million shares in Tesla and has already borrowed about half of his stock. If he puts up more shares as collateral to secure a $12.5 billion margin loan, he could be left with about 30 million un-plunged shares, according to a Reuters calculation.