With a market valuation of $1.2 trillion at the beginning of 2022, Tesla was one of the most valuable firms in the entire globe. With his ownership position in Tesla giving him a net worth of $300 billion and earning the respect of many committed investors, its CEO, Elon Musk, was the richest man on the planet.
Some of those investors are now doubting his judgement and his dedication to the innovative electric car start-up as the year concludes. Their dissatisfaction is centered on Musk's $44 billion purchase of Twitter in October, which has taken up the billionaire's time and weighed on Tesla stock. The fact that Musk himself sold about $40 billion of his personal stock in Tesla in the past year, contradicting his optimistic predictions about the automaker's future, may be the most upsetting development for Tesla investors.
The stock of the automaker has lost more than $700 billion in value as a result of Musk selling large amounts of Tesla shares and investors questioning his concentration. Investors were outraged when Musk disclosed in a regulatory filing on Wednesday that he had sold an additional 22 million shares of Tesla for nearly $3.6 billion. In fact, some well-known investors are currently observing black clouds rather than rainbows. Investors now feel like Musk abandoned them.
Before Musk bought Twitter, the billionaire was hailed as an entrepreneurial visionary who could transform the world through the use of his ground-breaking businesses, including SpaceX and Tesla, which aimed to put people in space and the adoption of electric automobiles. The protection of free expression, however, has become another one of Musk's passions because to his unexpected obsession with Twitter. Founder of SpaceX Jim Cantrell stated that Musk aimed to prevent nation-states from limiting individual freedoms. He has always been a strong supporter of free speech.
Elon Musk's business interests
Given that he had been particularly critical of the social media company's content moderation procedures, Twitter offered Musk a way to realize that objective. But closing that acquisition wasn't cheap; Musk overpaid for Twitter by $20 billion when he paid $44 billion for the company. Due to the high cost of Twitter, Musk was forced to drastically cut costs at the social media platform, which resulted in the layoff of more than half the workforce. But in order to finance the business, he also had to use his biggest source of wealth: Tesla stock.
Beyond investor concerns over the CEO's stock transactions, other problems with Musk's control of Twitter are starting to emerge. As a result of Musk's commitment to "free speech," the business reinstated previously banned accounts. Investors worry that Musk may damage the reputation of Tesla because he likes to stir the pot and his tweets are known to spark debate.
Given that competing automakers are releasing their own EVs and vying for market share with Tesla, it might seriously jeopardize Tesla sales.
Also, Elon Musk is no longer the richest man in the world. The head of the luxury goods company LVMH, Bernard Arnault, has surpassed him for the top slot. Investor activism may arise because of the stock's decline, the CEO's disinterest, and worries about the reputation of Tesla. The demand for the Tesla EVs could slow if the economy weakens, increased financing prices discourage consumers, and other companies raise their electric vehicle offers.
Share buybacks, in which corporations acquire their own stock on the open market, are already being pushed for by Tesla investors. Such a move can support or even raise a company's stock price because it lowers the total number of shares that are traded publicly. Investors believe that the board of Tesla will eventually be forced to address some of these concerns because of increased investor discontent and activist pressure.