In a significant market development, Tesla shares experienced a more than 2% rise on Thursday, following the news that Elon Musk would relinquish his role as CEO of Twitter.
Musk took to Twitter at 3:44 p.m. ET to announce the change, “Excited to announce that I have a new CEO for X/Twitter,” he tweeted. “She will be starting in ~6 weeks! My role will transition to being exec chair & CTO, overseeing product, software & sysops.”
Following the announcement, Tesla’s stock price experienced a surge, concluding the trading day at $172.08, and maintaining the uptrend after hours.
The past year has been tumultuous for Musk, who has faced criticism from investors since the initiation of the Twitter acquisition saga. The criticism stemmed first from Musk selling billions worth of Tesla shares to finance the Twitter buyout, and later from shareholders voicing their concern that Musk might be overextending himself by simultaneously leading Tesla, SpaceX, and Twitter.
In late April, a consortium of 17 Tesla shareholders, comprising major pensions and institutions, requested the board to curb Musk’s activities. They accused the entrepreneur of neglecting his duties at Tesla, his publicly traded electric vehicle (EV) company.
The shareholders’ letter stressed, “Corporate boards can and should intervene if a chief executive appears to be distracted or overly focused on other ventures. Yet, the board has allowed Elon Musk to run multiple companies, leading to an inability to address the multiple strategic and competitive issues facing Tesla.”
Investor Dan Nathan cited Musk’s substantial debt from the Twitter acquisition as a potential strain on Tesla, suggesting that Musk’s tenure as the CEO of three companies might be drawing to a close.
However, it’s not all been negative for Musk. He has managed to cut costs at Twitter through significant layoffs in recent months. Advocates like Ark Invest’s Cathie Wood have praised his leadership and commercial acumen.
Despite the turbulence, Tesla’s stock has shown an impressive performance, with an increase of over 59% in 2023. As Musk shifts gears from Twitter CEO to executive chair and CTO, the market will undoubtedly keep a keen eye on the impact of this leadership shuffle.