Musk is testing investors’ patience

Shares in electric car giant Tesla have cratered this year, losing more than half of the stock’s value. Investors always take a second look at richly-valued stocks when times get tough, so Tesla was bound to take a shellacking in a bear market. However, valuation isn’t the sole driver of Tesla’s misfortune – clearly, investors are increasingly exasperated by Elon Musk.

Tesla shares have tumbled recently following the farcical goings-on at Twitter. The “will he, won’t he” saga before Musk’s takeover was bad enough, but what’s happened since – spooking Twitter advertisers with half-baked ideas and then threatening them, rapid policy U-turns, sacking half the staff in controversial fashion, then asking some of them to come back – has been chaotic and a PR “nightmare”, as Wedbush analyst Dan Ives cautioned last week.

A long-term Tesla bull, Ives is annoyed that the endless Twitter controversies are potentially damaging Tesla’s global brand.

“Tesla is Musk”, as Ives puts it, so it’s not a positive for the company if an increasing army of people see Musk as unethical and obnoxious.

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He’s also irked that Musk offloaded almost $4 billion in Tesla stock last week. After selling $8.5 billion in Tesla stock last April, Musk said no further stock sales were planned. Another $6.9 billion stock sale followed in August; again, Musk reassured investors no more sales were coming. Now – shock, horror – Musk has broken his word again. Twitter has, as Ives notes, become a “money pit”.

For investors, Musk’s credibility is dwindling fast.