Elon Musk appears to be redeeming himself somewhat years after his failed bid to take Tesla private. Twitter is letting him try again, this time with the social media company.
Though details of the “funding secured” for this deal remain a bit opaque, he’s managed to win over Twitter’s board with a $44 billion offer that, if it goes through, will be one of the biggest leveraged buyouts in history.
This raises questions with huge implications, from who will Musk install to lead Twitter, to how will he try to monetize a platform that’s dependent on advertising. What I’m wondering, though, is what will this all mean for Tesla? The electric-car maker has long been clear about being highly dependent on its “technoking” and chief executive officer. Musk has laid claim to the tongue-in-cheek title for a little over a year and been CEO since 2008, a longer run than the head honchos at every American, German and Japanese auto manufacturer. But he’s also never been focused entirely on Tesla.
ALSO READ: Can Twitter become more profitable under Elon Musk?
“Although Mr. Musk spends significant time with Tesla and is highly active in our management, he does not devote his full time and attention to Tesla,” the company cautions in quarterly filings. Musk also leads SpaceX and is involved in tunneling venture Boring Company and machine-brain interface developer Neuralink.
The fireworks the last few weeks around Twitter are highlighting again just how much value investors ascribe to Musk’s part-time role, and how invested he is in the company — figuratively and literally.
Tesla’s stock plunged 12% on Tuesday, seemingly due to lingering concern that Musk will have to sell a substantial portion of the 172.6 million shares he owns to cover almost half of the financing for Twitter. We already know he’s taking on substantial margin-loan risk.
There’s also the worry that Musk, 50, is a man stretched too thin. This anxiety is based in part on lore Musk himself has fostered, often via tweet. He’s posted over the years about getting just a few hours of sleep and spending nights at Tesla’s factory.
Tesla is, of course, executing at a much higher level than it was during its time in “production hell.” Walter Isaacson, who’s working on an authorized biography of Musk, vouched for his subject’s ability to juggle running several companies on Tuesday:
Musk’s skill set isn’t just multitasking, though. He’s exhibited an ability to hyper-focus on problems at his various companies and relishes resolving complex engineering challenges.
At SpaceX, Musk has a capable and clear No. 2 in Gwynne Shotwell, the rocket company’s president and a director on the board.
At Tesla, it’s not nearly as obvious who’s second in command. The company names only three executives on its leadership team: Musk, CFO Zachary Kirkhorn, and Drew Baglino, who’s effectively CTO.
Kirkhorn has been something of a wunderkind since he took over the top finance post in 2019, and he and Baglino have played increasingly public roles the last couple years on earnings calls and at events like battery day. But Musk hasn’t been clear about how comfortable he is now handing the keys over to someone else. In fact, he’s at times given shareholders reason to be alarmed.
“If investors of Tesla knew the full scope of all the things that I do at Tesla, they would be quite concerned,” Musk told New York Times columnist Kara Swisher in September 2020. “Not because I want to, but it’s just, OK, I need to get this done, I need to get this done. I can’t find anyone do it.”
Last year, Musk testified in court that he “tried hard not to be the CEO at Tesla, but I had to or it would die.”
Musk’s willingness to pursue Twitter is a reflection of how much better positioned Tesla is now than it’s been in the past. But if I were a Tesla shareholder, I’d be on the phone with investor relations asking for much more clarity about its succession plans.
©2022 Bloomberg L.P.
