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HomeMarketTesla Investors Want a New CEO Instead of Elon Musk

Tesla Investors Want a New CEO Instead of Elon Musk

Tesla CEO Elon Musk.

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Carina Johansen/NTB/Getty Images

There is a growing chorus among
Tesla
bulls saying that if Elon Musk is busy at Twitter, then the car company’s board of directors should be looking to have someone else at the wheel.

It seems incredible that
Tesla
(ticker: TSLA) investors would want Musk’s role diminished at his car company, given that the stock is up 450% since the end of 2019. But shares are also down about 60% from their record of more than $400, and are off about 55% so far this year. Those declines have wiped out almost $800 billion in market capitalization.

Earlier in the month, Musk suggested on Twitter that a weakening economy is to blame for the decline. Investors aren’t so sure.

They see two main issues. First is the possibility that running the social media company will take time away from operating Tesla, not to mention the other businesses Musk manages. The second is that his actions as Twitter’s CEO, plus his increasingly political tweets, will damage Tesla’s brand.

“Elon blaming [Tesla] decline on macro is disingenuous,” wrote
Future Fund Active ETF
(FFND) cofounder Gary Black on Twitter “There’s a piece that’s due to macro. But vast majority is self-inflicted.”

He has a point. Tesla stock is down roughly 30% since he took over his social media platform. The
Nasdaq Composite
is flat over the same span.

Black doesn’t think a change is needed at Tesla. Instead, he’d like Musk to hire a CEO for Twitter and turn his attention back to his car company. Dozens of other tweets from people who say they own the auto stock go further, calling for a new CEO, either permanently or on a temporary basis.

Tesla’s third-largest individual shareholder, Leo KoGuan, is among those asking for a permanent successor. “Elon was the proud father,” wrote KoGuan in a tweet on Wednesday. “Tesla has grown up, an executioner, Tim Cook-like is needed, not Elon.”

Someone running Tesla other than Musk is as difficult to picture as someone running
Apple
(AAPL) other than Steve Jobs, but that transition was a success.
Apple
stock has grown roughly 10-fold since Cook took the reins in the middle of 2011.

It doesn’t always go that well when founders leave. When Jobs left Apple at the behest of the board of directors in 1985, the stock languished for more than a decade.

Tesla didn’t respond to a request for comment. Efforts to reach board chair Robyn Denholm; Kimbal Musk, the Tesla CEO’s brother and a board member; and the billionaire himself weren’t immediately successful.,

Tesla shareholder and Gerber Kawasaki Wealth and Investment Management CEO Ross Gerber pointed out in a recent tweet that Musk’s space company, SpaceX, has a strong leader besides Musk: Gwynne Shotwell. She is there to interface with customers, such as NASA, as well as with employees when issues emerge.

“If the [board] of Tesla made an announcement on what’s happening with Tesla leadership. Someone should be interim CEO. The stock decline would end,” tweeted Gerber on Tuesday. “It’s that simple.”

The board needs “to clarify what the plan is,” Gerber tells Barron’s.

An interim leader seems like a good balance for the Tesla board to consider. That would acknowledge Musk’s continuing role at the company while giving shareholders an additional source of authoritative information about what is going on at the business.

It is rare for investors to hear anything from someone at Tesla other than from Musk. CFO Zachary Kirkhorn and engineering chief Drew Baglino are probably the only other two senior executives that most investors can name at the company.

Information is critical, given what is happening in the auto industry. EV competition is ramping up just as the economy is weakening. U.S. car buyers will be getting new tax credits for buying EVs while Chinese car buyers will be losing some purchase incentives. And all that is happening while Tesla increases production at two new assembly plants, prepares to ship the new Cybertruck, and thinks about where to put its fifth car assembly facility.

It isn’t an easy scenario to manage.

Tesla stock was 3.3% lower on Friday, while the
S&P 500
and
Dow Jones Industrial Average
were both down about 1.2%. Coming into Friday trading, Tesla stock was off about 12% so far this week.

Write to Al Root at allen.root@dowjones.com

Credit: marketwatch.com

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