Is Twitter to blame for Tesla’s troubles?
- by The Irish Times
- Oct 20, 2024
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Sun Oct 20 2024 - 05:00
Is Twitter â now X â to blame for Teslaâs share price woes?
Well, not exactly, but Interactive Brokersâ Steve Sosnick reacted to the downbeat investor reaction to Teslaâs robotaxi event by suggesting Teslaâs 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 âabsolutely astonishing run of successâ, 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 âone company too manyâ for Musk to manage. Musk was already managing SpaceX and Starlink as well as Tesla, but those three companies at least shared âa common theme around transportationâ.
Muskâs lofty promises fail to deliver â again
A social media company is âa whole different animal â and a distracting one at thatâ. Anyone who has spent much time on social media knows it can be a âtrue time wasterâ, says Sosnick.
Managing complex companies while spending more time on social media is, he suggests, bound to affect your performance.
Additionally, Muskâs increasingly controversial output on X alienated some of Teslaâs âcore supportersâ, with Sosnick saying he knows âseveralâ people who sold or traded in their Teslas for that reason.
The BT/AX thesis is somewhat simplistic. Teslaâs 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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