[ad_1]
Elon Musk’s wealth slumped $12.6 billion amid a chaotic week for the billionaire and his collection of companies. His week wrapped up with a group of investors accusing Austin-based Tesla of mismanagement.
Since Wednesday, Musk — whose business empire consists of five companies, many of which have a presence in Central Texas — has had a turbulent few days that included a less-than-stellar Tesla earnings call, policy changes at Twitter and a rocket launch from his aerospace company SpaceX that ended in an explosion. The week was rounded off with a letter sent Friday by a group of 17 Tesla investors who together hold more than $1.5 billion in company stock and which raised concerns about Musk’s ability to be an effective CEO as he runs the rest of his empire. The letter also accused the board of not controlling the CEO.
Stock prices for Austin-based Tesla, Musk’s only publicly traded company, dropped nearly 12% this week, helping send Musk’s personal wealth, which is largely tied up in Tesla stock, down.
Bloomberg Billionaires Index, which ranks the daily wealth of the world’s richest people, showed that Musk lost $12.6 billion on Thursday. The drop is the most the billionaire has seen this year. Still, Musk easily remains the second-richest person in the world, behind only Bernard Arnault, the CEO of French luxury goods maker LVMH, which owns Louis Vuitton, Tiffany and other luxury brands. As of Friday evening, Musk was worth $164 billion and Arnault was worth $211 billion.
Tesla sees 24% drop in net income,multiple rounds of vehicle price cuts
Musk’s chaotic week
Tesla’s stock drop followed a quarterly earnings report and meeting on Wednesday evening for the Austin-based electric carmaker’s first quarter as it reported a 24% drop in net income last quarter. The drop came amid multiple rounds of vehicle price cuts this year that tightened profit margins. On Wednesday, Musk said the cuts are likely to continue. The price drops have come as competition in the electric vehicle market heats up.
On Thursday morning, SpaceX launched its first orbital flight of Starship, and while the rocket got off the ground, the launch ended in a fiery explosion four minutes into the test flight. While Musk touted the launch as exciting and a learning experience, the rocket is designed to reach the Moon and Mars, and the launch showed how far the company needs to go before those lofty goals can be reached.
Watch:SpaceX’s Starship successfully launch then explode
That same day, Musk’s notable problem child, Twitter, which he acquired in October, stirred up new controversy when the platform eliminated verification status for its legacy accounts, an action that Musk has promised to do but has pushed back several times. The platform eliminated a checkmark that verified the identity of accounts for non-paying subscribers and eliminated marking for government accounts and public figures, including the pope and President Joe Biden.
Now any users with a blue verification mark are those who pay an $8 monthly subscription to Twitter Blue and verify their phone number, or organizations that pay $1,000 a month. Musk also paid for a few select accounts himself, including for Lebron James and William Shatner, who both publicly said they would not pay for Blue.
On Friday, Twitter also quietly took labels that implied government oversight or involvement off of accounts that had been labeled as “Government-funded” and “China state-affiliated,” according to a report from Reuters.
What did the letter say?
On Friday, the Tesla investors raised a number of concerns, stating the board of directors is “failing to adequately represent the interests of Tesla’s shareholders” and had a “meager oversight” of Musk. It also said the same for other aspects of corporate strategy, including the company’s approach to human rights and labor rights, which the investors said opened up the company to legal, operational and reputational risks.
“The board has allowed the CEO to be overcommitted at a time when the company faces critical challenges, including increased competition, regulatory scrutiny, and a stock slide,” the letter said.
As a result, the investors asked for a meeting by May 25 to discuss its concerns and made several requests of the board. It asked for the board to ensure the company has a CEO that is dedicating adequate time and attention to the company, and to make a plan to overhaul board member compensation, including rotating out members with close ties to Musk. It also asked for either a policy that limits the CEO’s outside commitments or a CEO succession plan.
The letter also pointed out that as of April 3, Tesla had lost $582.4 billion in market capitalization since Musk disclosed his stake in Twitter about a year prior, and said Tesla is losing market share in the electric vehicle market as automakers launch comparable models at similar or lower price points.
Austin-based Tesla:Advocates say workers faced wage theft, other violations as factory was built
The investors also cited a number of concerns related to human and labor rights, including incidents at Tesla’s southeastern Travis County manufacturing facility. The letters listed reports of alleged incidents related to unsafe working conditions, wage theft and falsified certificates of safety training in Tesla’s Austin facility, and linked to media reports. It also included complaints for Tesla’s factory in Fremont, Calif, including allegations of racial discrimination and a hostile work environment, as well as allegations of union busting in New York.
The letter accused Tesla of embracing a culture of being “above the law” and also mentioned probes from the U.S. Department of Justice and investigations by the National Highway Traffic Safety Administration and the California Department of Vehicles related to Tesla’s controversial self-driving software.
“Instead of working to address problems with regulators, CEO Musk has made derogatory tweets and comments, fueling tensions,” the letter said.
Concerns likely to stay
Concerns that Musk has been stretched too thin have been raised before, particularly since Musk first purchased Twitter.
Dan Ives, an industry analyst with Wedbush Securities, said the scrutiny is likely to continue.
“This is a careful balancing act for Musk as he is juggling a lot of balls at the same time with Tesla, SpaceX and Twitter,” Ives said. “Investor scrutiny will continue to grow around Musk with a pivotal year for Tesla looking ahead.”
Mapping Musklandia:A guide to Elon Musk-related activity in the Austin area
The criticism comes as Musk has increasingly moved and expanded his business empire into Central Texas. In 2020, the billionaire confirmed he moved to Texas to be closer to SpaceX’s South Texas site and Tesla’s Austin-area manufacturing facility.
Musk also has relocated the headquarters of automaker Tesla and the Boring Company, a tunneling and infrastructure firm, to Central Texas, along with his private foundation. He also has set up offices in the region for SpaceX and his neurotechnology company Neuralink. Musk has also hinted at moving a second Twitter headquarters or office into Texas in the past, but so far has made no public moves to do so.
[ad_2]
Source link