Stocks Drop, Investors Worried Elon Musk's Attention To Tesla Drops After Twitter Acquiring

JAKARTA - Elon Musk's move to buy Twitter for $44 billion has raised concerns about the depth of executive talent at his more valuable company, Tesla Inc. Especially if the attention of the richest person in the world is further divided into the social media platform.

In announcing the deal on Monday, Musk called Twitter the "digital city square" for the world. He even talks about protecting free speech, but he also rekindles fears that as a man who once admitted to sleeping on the factory floor during the launch of the Tesla Model 3 sedan.

"Tesla feels very much like a startup despite being a trillion-dollar company," said Tesla investor Ross Gerber. "It's as big as or bigger than the biggest company in the world, but it doesn't have the management infrastructure like other companies."

Additionally, Tesla is racing to ramp up production at new plants in Texas and Berlin amid supply chain disruptions and higher raw material costs, as well as restore jobs at its largest plant in Shanghai during a spike in COVID-19 cases there.

Musk said in January Tesla had too many problems and would not introduce a new model like the Cybertruck this year. But he claims that Tesla has managed to solve the problem, but the heavier pull of his focus on Twitter has some Tesla investors starting to worry.

"I'm afraid this will be a distraction," said one fund manager with a key position at Tesla who asked not to be named. "He's juggling supply chains and factory delays and expansion of the energy storage business and it just doesn't fit."

Following the Elon Musk saga on Twitter, Tesla shares briefly slipped more than 10% on Tuesday, April 26, the day after Musk reached a deal to buy Twitter.

"Worries about Musk selling Tesla stock to pay for the Twitter deal and worries about Musk's distraction. This has led to a (bearish) bear festival," said Wedbush Securities analyst Dan Ives.

Tesla's shares have fallen about 18% since Musk first revealed he owns more than 9% of Twitter on April 4.

Tesla could not be reached for comment, but one company insider who asked not to be named said the investor's concerns were too "exaggerated" and that Musk was still deeply involved at the automaker's factory.

Musk currently also heads rocket company SpaceX, as well as brain-chip startup Neuralink and tunneling venture the Boring Company.

Tesla has undergone a change of executive leadership before with the departure of co-founder JB Straubel in 2019 and company President, Jerome Guillen, last year.

Tesla, founded in 2003, has now grown to become the most valuable automaker but there are only two executives listed along with Musk on his leadership team on the company's website. This is certainly very different when compared to the 17 executive names at General Motors and 11 at Volkswagen.

Tesla's current high-profile leadership outside of Musk is Chief Financial Officer, Zachary Kirkhorn and Senior Vice President, Andrew Baglino, who is in charge of powertrain development. Both are known to investors from their appearance at Tesla's quarterly earnings announcement conference some time ago.

Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, who owns a number of Tesla shares in accounts he manages, wondered whether Musk would install someone else to lead Twitter.

"I think that would be the most logical thing," he said. "Looks like he's busy with Tesla and SpaceX."

Ross Gerber says maybe Musk needs executive No. 2 as strong as he has at SpaceX like President Gwynne Shotwell to lead Twitter.

Ian Beavis, chief strategy officer at automotive consultancy AMCI, fears Musk's purchase of Twitter, with its controversy surrounding political and social issues, could even damage the Tesla brand.

According to Reuters calculations, Musk holds 172.6 million shares in Tesla but he has borrowed about half of that amount to pledge as collateral to the bank. If he put more stock as collateral for a $12.5 billion margin loan, he might still have about 30 million shares unsecured.