January 27, 2023

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Elon Musk: distracted by Twitter, on Twitter

Elon Musk says he will install a Neuralink computer chip in his brain as soon as they are available. Lex believes a version of the brain-computer interface already exists for the tech entrepreneur via his tweets. The daily stream of jokes and company updates offers a glimpse into his changing priorities. Twitter, its latest acquisition, seems to be taking more time than ever.

This week, Musk has tweeted 55 times, Tesla 14 times, and SpaceX twice. A similar collapse happened the previous month, shortly after the Twitter acquisition. Compare that to late June, just before Musk tried to drop his Twitter bid. He then tweeted eight times about Twitter, 15 times about Tesla and 12 times about SpaceX.

Musk uses his Twitter account as a free source of advertising for his companies. From the moment he placed a bid on Twitter, Tesla investors worried about the attention their CEO had already garnered. Musk tried to allay those worries in May by claiming he spent less than 5 percent of his time on the proposed Twitter acquisition. Tesla, he said, is on his mind 24/7. Investors weren’t convinced. Since Musk’s Twitter offer was announced in April, Tesla’s share price has fallen 43 percent. The tech-heavy Nasdaq index fell 16 percent over the same period.

Tesla is a $610 billion company. SpaceX, which is private, was last valued at $125 billion. Twitter was bought for $44 billion. However, it requires disproportionate attention. The Musk acquisition saddled it with $13 billion in debt, and the company last reported annual earnings in 2019. Most of its earnings come from advertisers, a group that has reduced its spend due to concerns about content moderation. Without further cost cutting or a major source of new revenue like payments, interest costs could exceed free cash flow in 2023.

Musk is an impressive multitasker. However, Tesla investors should be wary of Twitter’s ability to monopolize its attention.

Lex recommends the FT’s Due Diligence newsletter, a curated briefing on the world of mergers and acquisitions. Click here to login.