At his peak, Elon Musk owned about a quarter of Tesla, but his stake is now down roughly 40 percent from that. KevinTDugan reports on whether Musk could lose his ability to call the shots at the company
. “He’s essentially using Tesla as an ATM machine to fund Twitter,” said Dan Ives, tech analyst at Wedbush Securities. And just as Musk was the force behind the company’s meteoric rise throughout the pandemic, he’s also the reason behind it losing more than $600 billion in market capitalization since last November. “Eighty percent of this is self-inflicted, in our opinion, by Musk and the Twitter circus show that is getting worse, not better,” Ives added.
Take this in from the eyes of a cold-blooded Wall Street investor: Tesla is plausibly cheap, and Musk owns less of it than ever — and would have a hard time backing off a challenge to his control. Musk said Twitter loses $4 million; he’s got to keep it going somehow, and the easiest way is to just draw down his Tesla stake. But, at this rate, someone like Carl Icahn can easily come along, say “I can do this better than you can,” and muscle their way onto the board.
Does this mean Musk will get booted from Tesla? Probably not. But who controls Tesla is an active question in Delaware Chancery Court, the very venue where Musk found an unfavorable audience in his bid to get out of buying Twitter.
The way publicly traded companies work is that they’re run by the top executives but controlled by the board — which ultimately answers to the shareholders. In Tesla’s case, this arrangement has largely worked fine because its CEO is charismatic and shareholders have made good money. But there is a risk here that this deal won’t hold together forever. For as much as Tesla is a darling of Silicon Valley, it is structured in a much more traditional way than, say, Meta .
There are still a lot of factors that could keep Musk from losing total control. For one, he could potentially continue to get billions of dollars’ worth of stock options to bring his stake higher, though that may be harder to pull off if the stock keeps falling. The rising cost of debt from interest-rate hikes by the Federal Reserve would also make a leveraged buyout an extremely expensive proposition for anyone — exactly the risk that led Musk to descend into the Twitter morass.
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