Elon Musk's Personal Actions Put Investors At Risk, Tesla Bull Re-Ups 2018 Letter

The extra workload coupled with the overhang on Tesla Inc TSLA shares from CEO Elon Musk's selling a portion of his stake in the electric vehicle company to help finance the $44 billion acquisition of Twitter puts "investors at risk."

That's according to Loup Funds managing partner Gene Munster, one of Tesla's most vocal supporters.

What Happened: Over the weekend, Munster re-shared an open letter that he sent to Tesla back in 2018 when he thought Musk's "personal actions" were jeopardizing the company.

"We see some of the same patterns playing out with Twitter and thought it was worth resurfacing,” Munster said.

For Tesla to continue its success, Munster says the Austin, Texas-based car manufacturer needs access to capital and the “confidence of investors.”

In the letter, Munster cited outbursts at analysts on earnings call, frustration with short sellers and the media, and a confrontation with rescue diver Vern Unsworth in which Musk made baseless claims as items that “raised flags with investors.”

“Your behavior is fueling an unhelpful perception of your leadership – thin-skinned and short tempered," he wrote at the time.

Munster advised Musk to apologize, focus on Tesla and take a break from Twitter.

“Twitter might keep Tesla in the news but it won’t help continued improvements in production and product," he said.

Munster also suggested that Musk ignore short sellers.

“During my time as an analyst I have observed that when companies aggressively engage with short sellers, they lose," he said. "The best way to beat them is not with words, but actions that drive the stock higher.”

Related Link: Why Munster Thinks Tesla Is The Biggest Beneficiary Of Climate Bill 

Why It’s Important: Munster's sharing of the 2018 letter and noting similarities underscores hwo some of the biggest Musk and Tesla supporters are not fans of the Twitter acquisition.

Munster recently praised Tesla on Benzinga’s PreMarket Prep with comments that a rotation back into mega-cap tech stocks could happen in 2023.

“There are a couple companies, Apple and Tesla, that kind of stand out amongst the six or seven biggest tech companies,” Munster told Benzinga.

Tesla had some short-term headwinds with the acquisition of Twitter taking up more of Musk’s time, he added.
Wedbush analyst Daniel Ives has also been outspoken against Musk's "Twitter antics." He currently has an Outperform rating on Tesla shares, lowered the price target from $300 to $250, and removed the company from his "Best Ideas" list.

Tesla investors could have more pain in the coming months thanks to Musk’s "shifting attention from Tesla to Twitter," he explained.

“The stock now is deep in the investor penalty box until deliveries hit in early January and we get a better sense of the 2023 delivery/production trajectory,” Ives added.

Future Fund Managing Partner Gary Black also noted how the Twitter overhang wwas negatively impacting the Tesla share price. Black was recently bullish on the overhang being lifted after the acquisition was completed and Tesla reported earnings, unlocking time for Musk to sell shares of Tesla if he chose.

“We continue to believe Twitter overhang depressing Tesla shares lifts once Elon closes the deal and announces he’s done selling Tesla shares,” Black tweeted.

Black has a price target of $550 on Tesla shares over the next six months to twelve months with catalysts for the company including FSD Beta wide release, more electric vehicle credits, a potential share buyback, the Cybertruck launch and a $30,000 vehicle.

Black recently reminded Tesla bulls that they are on the same team and to direct their negative energy toward those rooting for Tesla to fail.

“When a long-term bull posts constructive research that highlights short-term risks they should be praised, not attacked.”

TSLA Price Action: Tesla shares are down 3% to $190.05 on Monday.

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