Tesla‘s share price fell yet further on Friday to close 6.42 percent down, as the company reeled from revelations that their founder Elon Musk paid off a sexual harassment accuser, and the ongoing unsettling impact of his bid to buy Twitter.
Musk, 50, has seen his company’s share price tank 40 percent since April 4.
The company has been hit with supply chain issues, and is struggling to compensate for the lockdowns that continue in China, causing delays in essential components.
It is also facing a growing threat from other manufacturers of electric vehicles: Volkswagen sold 56,000 battery-powered cars in Western Europe during the first three months of the year, almost catching Tesla, which sold 58,000.
Last month the S&P 500 ESG Index, a listing of companies that meet certain environmental, social and governance standards, kicked Tesla out of its listings, citing allegations of racial discrimination and poor working conditions at its factories. Musk said it was a ‘scam’ and based on prejudice against him.
Elon Musk is seen in September 2020 at the site of a future Tesla factory on the outskirts of the German capital, Berlin. His company’s shares at the time were valued at $407
Tesla’s shares are down almost 45 percent so far this year, and have plunged in the last month
Furthermore, investors are questioning whether the company, worth $1 trillion, has been over-valued, and it too closely aligned with its mercurial owners.
Musk famously fired his communications team in October 2020, and handles the issue himself, with eyebrow-raising results.
His online presence reinforces the perception that Tesla lacks an independent board of directors, which would help stop him from damaging the business.
‘From a corporate good governance perspective Tesla has a lot of red flags,’ said Andrew Poreda, a senior analyst who specializes in socially responsible investing at Sage Advisory Services, an investment firm in Austin, Texas.
He told The New York Times: ‘There are almost no checks and balances.’
Tesla’s share price has declined significantly since his April 25 deal was agreed to buy Twitter for $44 billion.
The share price decline has complicated Musk’s bid, because it has reduced the capital he can put into the company.
Musk lost $15.7 billion of his net worth last week, as shares of his electric vehicle maker fell by 8 percent.
Tesla’s factory in Shanghai. The lockdowns in China have hit Tesla’s supply chain hard
A Tesla vehicle is seen at a Manhattan dealership in January
Musk is seen in March 2022 in Berlin with the German chancellor, Olaf Scholz, celebrating the start of production
The company’s share price peaked in November, at $1,222.
At the beginning of this year it was at $1,999, but has sharply dropped off since.
Still, the share price is indeed up from a year ago: in May 2021, Tesla shares were valued at $580.
His Twitter bid has certainly not helped, as it has put Musk himself front and center in his businesses.
The billionaire’s latest comments on politics and a claim of sexual harassment against him that he said is untrue may hurt the brand in the eyes of some car owners and employees.
Musk on Thursday denied a report by Business Insider that he sexually harassed a flight attendant on a private jet in 2016, calling the person who made the claim a liar.
The previous day, the Tesla chief executive, in the midst of a contentious effort to buy Twitter Inc, said he would now vote Republican instead of Democrat and called the Democrats a ‘party of division and hate.’
While Musk has made attention-grabbing headlines before – once calling one critic a ‘pedo guy’ on Twitter – the latest controversies again raise the question whether his outspokenness will tarnish his likeability.
Musk is seen in Berlin in March, opening his newest production facility
And – since Musk is so closely tied to Tesla – whether that will that hurt the carmaker’s sales, especially in California.
The left-leaning state is Tesla’s largest market, accounting for nearly 40 percent of the company’s U.S. retail registrations last year, according to Experian data.
Tesla sales in California were up almost 70 percent in the year and it had a 6.5 percent share of all vehicles in the state, according to the California New Car Dealers Association.
#BoycottTesla was trending on Twitter on Friday and several people claimed they were canceling their car orders.
‘In the past, I admired him for working to build a green business that’s transformational in energy use. But he is sadly becoming divisive as an attention seeking troll and I no longer trust that he is dedicated to the quality of his products. I will cancel my Tesla order,’ said J Yeh, a Twitter user who describes herself as a lawyer who has lived in several cities including Los Angeles.
‘You lost a potential customer,’ a Twitter user named Ute Bauer from Germany said, adding in German: ‘To anyone reading this, cancel your orders.’
Many institutional investors may stand by Musk no matter what, given the company’s strong performance in the last 12 months, but that doesn’t mean some aren’t frustrated.
‘They’re doing a lot of good things,’ said Taylor Ogan, CEO of Snow Bull Capital, which owns Tesla shares.
‘It’s just disappointing when that is tainted by Elon Musk’s antics.
‘Elon Musk is the best thing for Tesla and the worst thing for Tesla.’
One Tesla employee, who asked not to be identified, voiced frustration that Musk’s efforts outside Tesla appeared to be hurting the carmaker’s stock.
‘The company needs to do something to address the issue,’ he said, according to Reuters.
If discussion around water coolers at work focused on the sexual harassment claim against Musk rather than Tesla products, the end result could be ‘corrosive’ for the Tesla brand, said John Smith, a former group vice president at GM who ran global product planning.
Tesla and SpaceX employees also could become ‘a little bit rattled and angry’ because of Musk’s anti-Democratic party comments as technology company staff in California tend to be more liberal, said Jason Stomel, founder of tech talent agency Cadre.
Bill Nelson, administrator of NASA, which relies on Musk’s SpaceX to fly its astronauts to space, told Reuters on Thursday that Musk has a strong team of executives at the spacecraft maker and the agency’s partnership with the company was ‘going without a hitch.’
That left some industry observers wondering whether Musk and Tesla would simply shake off these latest controversies, as they have in the past.
‘Is Elon Musk now crazy, or crazy like a fox? He has earned the benefit of the doubt as he is often playing chess when the rest of us are playing checkers,’ Northwestern University professor Erik Qualman said.
‘As Musk himself on ‘Saturday Night Live’ famously stated, ‘What, did you think I would be normal?”
Trump says Elon Musk’s takeover of ‘Fake Twitter’ is ‘probably illegal’ and claims the billionaire told him he’d always voted Republican in scathing post on his rival Truth Social network
Musk had tweeted this week: ‘In the past I voted Democrat, because they were (mostly) the kindness party. But they have become the party of division & hate, so I can no longer support them and will vote Republican.’
‘Gee, Elon Musk never told me that until now he only voted for Democrats. Actually, it was quite the contrary,’ wrote Trump in his Truth Social post.
Donald Trump has lashed out at Elon Musk, calling the billionaire’s $44 billion Twitter takeover ‘probably illegal’ in a post on his own competing social media network
He continued: ‘but now it seems, with all of his problems with a probably illegal purchase of a crummy phony account loaded company, Fake Twitter, he wants to be a Republican because the Dems are a ‘Party of hate.”
‘I could have told him that a long time ago, but actually they are a Party of sickness, greed, corruption & absolute horrible policy,’ added Trump. ‘Good luck Elon, have fun!!!’
Trump did not explain what element of Musk’s Twitter bid, which was accepted by the company’s board in a legally binding contract, might be ‘illegal’.
Although Musk has vowed to allow Trump to return to Twitter if his buyout closes successfully, Trump has repeatedly said that he won’t go back, and his post on Friday was the latest sign that he holds no enthusiasm for Twitter.
Trump was banned from Twitter following his loyalists’ attack on the US Capitol on January 6, 2021, after the company said he violated their ban on glorification of violence.
Trump lashed out at Musk as his own social media venture faces the prospect of increased competition if Musk acquires Twitter and allows conservatives that had been banned a freer rein on the site.
Truth Social had been billed as the conservative alternative to Twitter, and in appearance and function the two sites are extremely similar.
Musk on Friday jetted to Brazil for a meeting with the country’s controversial President Jair Bolsonaro while mired in a new sex scandal.
Musk, who denied paying off a private jet flight-attendant for exposing himself to her, flew to Sao Paolo Friday to discuss illegal deforestation of the rain forest and rural internet connectivity in Brazil.
The Tesla billionaire – who is the world’s richest man, with an estimated fortune of $208 billion – will have burned around 30,000 pounds of jet fuel on the lengthy flight.
The day before the meeting with Bolsonaro, a report emerged alleging that Musk sexually harassed a SpaceX flight attendant in 2016.
Musk has denied exposing himself to the woman and propositioning her for sex. It’s further alleged that the flight attendant was paid $250,000 to remain silent.
According to the Twitter account ElonJet, that tracks the comings-and-goings of the billionaire’s private jet, Musk’s Gulfstream landed in Sao Paulo around 8 a.m. EDT.
The account notes that Musk’s journey to discuss the future of the rainforest would have used close to 30,000 pounds of jet fuel and created 47 tons of CO2 emissions.
Brazil’s President Jair Bolsonaro (L) shakes hands with CEO, and chief engineer at SpaceX, Elon Musk, at the event Conecta Amazonia in Porto Feliz, Sao Paulo state, Brazil on Friday
Musk tweeted: ‘Hodl the rainforests’ in 2021!!’ Hodl is a social media acronym for ‘Hold on for deal life’
Musk’s Gulfstream CG50 can hold up to 44,000 pounds of jet fuel or 6,597 gallons.
Bolsonaro said on a live broadcast Thursday night: ‘We’ll have a meeting with a world-renowned person, who’s coming to help our Amazon,’ reports Bloomberg. Bolsonaro did not mention Musk in the broadcast.
It is no secret that Bolsonaro has wanted Musk to build a Tesla factory in Brazil since at least 2020.
The Bolsonaro meeting also comes just days after Musk announced that he will ‘vote Republican’ after previously supporting Democrats in the past.
Bolsonaro is an unabashed supporter of former President Donald Trump and vice versa. The controversial Brazilian leader has even been christened in some circles as ‘The Trump of the Tropics.’
When Musk announced his plans to acquire Twitter, Bolsonaro championed the takeover.
The Brazilian president has claimed that he has been censored by social media platforms in the past.