Is Twitter – now X – to blame for Tesla’s share price woes?
Well, not exactly, but Interactive Brokers’ Steve Sosnick reacted to the downbeat investor reaction to Tesla’s robotaxi event by suggesting Tesla’s history can be divided into two eras: BT (Before Twitter) and AX (After X).
When Elon Musk announced he was buying Twitter in April 2022, Tesla had completed an “absolutely astonishing run of success”, with shares increasing nearly 20-fold in the prior 30 months. Things have since been very different, with Tesla shares down some 40 per cent.
Sosnick suggests Twitter/X may have been “one company too many” for Musk to manage. Musk was already managing SpaceX and Starlink as well as Tesla, but those three companies at least shared “a common theme around transportation”.
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A social media company is “a whole different animal – and a distracting one at that”. Anyone who has spent much time on social media knows it can be a “true time waster”, says Sosnick.
Managing complex companies while spending more time on social media is, he suggests, bound to affect your performance.
Additionally, Musk’s increasingly controversial output on X alienated some of Tesla’s “core supporters”, with Sosnick saying he knows “several” people who sold or traded in their Teslas for that reason.
The BT/AX thesis is somewhat simplistic. Tesla’s valuation had swollen to unsustainable levels by April 2022, so some kind of share price reckoning was nigh-on inevitable. Still, multiple analysts questioned in 2022 whether buying Twitter would be a negative distraction for Musk. The events of the last 30 months have answered that question.
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