On October 27 of this year, Elon Musk completed his $44 billion takeover of Twitter and became the company’s CEO. Earlier that day, the stock of Tesla — the electric-car company that Musk also runs — hit $233 a share. That put it down about 33% from where it had started the year. And over the next two months, Tesla’s stock would plummet much further, ending the year down another 47% (and that was even after it rallied more than 10% in the final two days of trading).
Given the steady rise in interest rates over the course of the year, and investors’ concern about the possibility of a recession — both of which led to a downward revaluation of high-priced stocks — it was inevitable that Tesla’s stock was going to take a significant hit in 2022. But generalized economic concerns can’t explain the tumble Tesla took at the end of the year. The S&P 500, for instance, was roughly flat between October 27 and the end of the year, while even the tech-heavy Nasdaq was down only about 5%. Correlation is not causation, but in this case, it’s hard to avoid the conclusion that Musk’s erratic and often odd tenure as CEO of Twitter had a lot to do with why lots of investors dumped their stock in Tesla.
The interesting question is why. There’s no denying that Musk’s behavior with regard to Twitter has raised serious questions about his business judgment. He significantly overpaid for Twitter, mostly with his own money, and loaded it with debt that means it has to pay roughly a billion dollars a year in interest. He alienated advertisers — a strange thing to do given that Twitter gets almost all of its revenue from advertising — by scrapping most, if not all, content moderation on the site, and by tweeting in an oddly reckless manner, including most famously linking to a totally fabricated account of the attack on Paul Pelosi. And while he has slashed costs at Twitter (largely by laying off most of the company’s workers), many of his moves have felt kneejerk and understrategized, almost as if he’s taken the motto “Move fast and break things” too much to heart.
Even so, while Musk’s changes may not have been great so far for Twitter’s underlying business, none of them had any effect on Tesla’s economic fundamentals. It’s still the world’s dominant electric-vehicle manufacturer. It’s…