Mohit Oberoi
Tesla (NYSE: TSLA) and its charismatic CEO Elon Musk have lost some popularity since the world’s richest person acquired Twitter. TSLA stock has also been in a freefall since then, widely underperforming the market.
Musk made a surprise entry at the Punchline Comedy Club event yesterday held at the Chase Center in San Francisco. Comedian Dave Chappelle asked the audience to “make some noise for the richest man in the world.”
There was indeed a lot of “noise” as Chappelle called for. However, more than the cheers that Musk and Chappelle might have anticipated, Musk was greeted with a lot of boos. Chappelle asked Musk about the boos, “You weren’t expecting this, were you.”
Chappelle added, “It sounds like some of those people you fired are in the audience.” Notably, after Musk acquired Twitter, he laid off almost half of the company’s workforce. He also let go of many contractors unannounced.
To be sure, along with his vast army of fans, Musk is also hated by many others. However, a few months back, one would have expected more cheers than boos at an event where Musk made an appearance. However, the brand Musk has taken a beating ever since the Tesla CEO acquired Twitter.
Musk is Getting Unpopular, Got Booed at Punchline Comedy Club
Musk has always been polarizing and along with his vast and loyal fan army, there were many who disagreed with him. However, Musk is now a polarizing personality on political lines as well.
Musk has shifted his political allegiance to Republicans by declaring that he would vote for Ron DeSantis in the 2024 presidential elections. He has also irked many by restoring former President Donald Trump’s Twitter account.
Trump meanwhile is not keen on joining Twitter. He has launched his own social media business which has announced a merger with Digital World Acquisition (NYSE: DWAC). We have a guide on how investors can buy DWAC stock.
While it’s not uncommon for business leaders to be vocal with their political affiliations, Musk has been drifting towards conservatives which might alienate some consumers on the other side of the political divide.
The issue gets even more problematic if we consider that many conservatives, including Trump, see climate change as a hoax. Musk had even pulled out of Trump’s Economic Advisory Council after the former President withdrew the US from the Paris Climate Deal.
A lot of potential Tesla buyers are liberals who might now have second thoughts about buying a Tesla car given Musk’s political affiliations.
Tesla Brand is Damaged After Musk Acquired Twitter
Morgan Stanley, which is among the most visible Tesla bulls, has surveyed institutional investors and industry experts and the results are not surprising. Almost three fourth of the respondents believe that Musk’s ownership of Twitter has had some impact on TSLA’s price action.
Nearly 65% believe that Musk’s Twitter acquisition would have a negative impact on TSLA’s business going forward.
Meanwhile, Morgan Stanley analyst Adam Jonas continues to remain bullish on TSLA stock and believes that there would be a good buying opportunity near his bear case target price of $150. We have a guide on how to buy Tesla stock.
Other surveys have also shown that the Tesla brand has got tarnished. YouGov conducts surveys on consumers’ perceptions of leading brands, including Tesla. Historically, more people viewed the Tesla brand favorably than those who did negatively. However, the November 7 survey showed that more people view the Tesla brand negatively.
Surveys Show Negative Perception of Tesla Brands Are On a Rise
US-based consulting firm Morning Consult’s findings also showed that consumers’ negative perception of the Tesla brand is on a rise.
Kelley Blue Book’s quarterly Brand Watch Report showed that 64% of electric car shoppers considered a Tesla last quarter, which was below the 75% that did so a year back. Separately, S&P Global Mobility reported that TSLA’s market share in the US fell to 65% in the third quarter of 2022—down 6 percentage points from the last year.
Here it is worth noting that the fall in preference and market share could also be on account of the increased availability of competing EV models, both from startup EV companies as well as legacy automakers.
Markets Let Musk Know that his Twitter Acquisition is Hurting TSLA Stock
That said, for the first time in years, there are concerns over the demand for Tesla cars. There were reports that the company is looking to cut production in China by 20% but Tesla said they were not correct. Now reports suggest that the Elon Musk-run company is delaying hiring and cutting shift time in China amid slowing demand.
At a time when Musk should have been razor focused on Tesla including elusive projects like robotaxis, he is entangled with fixing the troubles at Twitter. Markets have let Musk know in no uncertain terms that his Twitter antics are hurting TSLA stock. But, the mercurial CEO hasn’t listened to the market, at least so far.
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This article was written for Business 2 Community by Mohit Oberoi.
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