The Elon Musk-Twitter (TWTR) saga took a turn toward resolution yesterday with news Musk would honor his deal to purchase Twitter for $44 billion. The drama for Tesla (TSLA) shareholders, however, will likely linger.
“To the surprise of most, rationality broke out belatedly and Musk settled—on the eve of his deposition in Texas,” John Coffee, Columbia Law School professor told Yahoo Finance. “Yesterday, Tesla stock did not decline, and this may be because we do not yet know if Musk will be joined by others in his bid.”
Shares of Tesla did initially fall on news the deal would be coming to close but then rebounded with the Street perhaps concerned Musk may need to sell more shares to fund the deal. As of now there is no indication that would need to happen.
The bigger long-term concern is whether adding Twitter to the mix of companies Musk has in his portfolio will further consume the mercurial CEO’s time and focus. Musk is of course CEO of Tesla, co-founder and CEO of SpaceX, founder of the Boring Company, and co-founder of Neuralink and OpenAI.
As of today there is no indication of what Musk’s role at Twitter may be, other than the fact he will be owner of the company. Will he become chairman of the board? Or even CEO? Or Will he install management that he can control and mold Twitter into what he thinks it should be?
An undertaking like this would likely require much of Musk’s headspace, a concern for Tesla analysts and shareholders.
“He's been pretty vocal about criticizing existing management teams, so I wouldn't be surprised in the next three to six months, he figures out who would run Twitter,” said MKM Partners analyst Rohit Kulkarni on Yahoo Finance Live. “I think it's fair to say he would be fairly distracted with probably putting more time behind Twitter and putting less time behind other things.”
Musk has already tweeted about his ambitions for Twitter beyond management changes — and they are undeniably quite grand:
Buying Twitter is an accelerant to creating X, the everything app
— Elon Musk (@elonmusk) October 4, 2022
Building something as ambitious as a “WeChat” for America, as has been reported Twitter could be, would likely be a massive undertaking, and perhaps a concern for stakeholders in his other companies, such as Tesla.
“The broader worries are Musk is spread too thin at such a key time for Tesla,” Wedbush Securities analyst Dan Ives told Yahoo Finance. “He is juggling a lot of balls at the same time and that makes Tesla investors on edge with Twitter the new kid on the block to the Musk ecosystem.”
Columbia’s Coffee agrees with that assessment. “Obviously, Musk is being stretched between too many assignments. Tesla seems in good shape, but Twitter will need to be reshaped to reflect Musk's vision,” he said. “Twitter will take much time as Musk has to convince his lenders to honor their earlier commitments and they may have increased doubts after [Twitter whistleblower Pieter] Zatko and others have dumped all over Twitter.” In an 84-page complaint, Zatko, former head of security for Twitter, has accused the company of lax security and neglecting user privacy, among other concerns.
On the flip side, Musk has shown over the years he can handle numerous responsibilities, including taking Tesla from a company that made one limited quantity electric roadster 15 years ago to a company that produced over 360,000 EVs last quarter, all the while keeping SpaceX on track for crewed missions to the ISS, and also working on the company’s Starship with a stated goal to land on Mars.
The question is what is next for the world’s richest man — beyond trying to manage his various projects, while trying to take Tesla to place where in 10 years he sees the company producing millions of EVs and justifying its near trillion dollar valuation.
“My only prediction,” said Coffee about the seemingly restless and enterprising Musk, is that he “will not acquire another multi-billion dollar company on a whim—for at least a couple of months.”
That may be the only consolation Tesla shareholders will get, at the moment.