Tesla gets downgraded on Wall Street over Elon Musk's Twitter antics, banning of journalists
SAN FRANCISCO -- Elon Musk's management of Twitter, including the banning of multiple journalists, has "severely damaged" market sentiment around Tesla, and risks sparking a backlash from advertisers and consumers, a Wall Street analyst warned on Monday.
Oppenheimer & Co. downgraded its rating on Tesla, where Musk is the CEO, solely because of risks posed by the billionaire's ownership and management of Twitter.
"We believe Mr. Musk is increasingly isolated as the steward of Twitter's finances with his user management on the platform. We see potential for a negative feedback loop from departure of Twitter advertisers and users," Oppenheimer analyst Colin Rusch wrote to clients.
An exodus of advertisers will only further erode Twitter's finances and force Musk to unload even more Tesla stock to cover the cash hole, the firm wrote.
Oppenheimer specifically cited Twitter's decision last week to ban several journalists, including CNN's Donie O'Sullivan, as a catalyst for the downgrade.
As CNN previously reported, Musk offered several journalists he banned from Twitter the option to return if they deleted the tweets he falsely claimed shared his "exact-real-time location."
Rusch, the Oppenheimer analyst, said the "inconsistent standards application" for Twitter users has helped create a "broad public backlash" against Musk that will in turn hurt Tesla.
"We believe banning journalists without consistent defensible standards or clear communication in an environment where many people believe free speech is at risk is too much for a majority of consumers to continue supporting Mr. Musk/TSLA, particularly people ideologically aligned with climate change mitigation," Rusch wrote.
In other words, Musk's antics are bad for business, even the business of Tesla.
Tesla shares have plunged by about 58% since Musk disclosed his stake in Twitter.
Tesla shares briefly jumped in premarket trading Monday after Musk polled users on whether he should quit as Twitter CEO.
Ross Gerber, a shareholder in both Twitter and Tesla, said over the weekend that he hopes Musk finds a CEO for Twitter during the first quarter of 2023.
"I think it is in the best interest for Tesla shareholders for Elon to be back at Tesla working full time," Gerber said on Twitter.
