Elon Musk, the billionaire entrepreneur known for his ambitious ventures, is facing significant financial challenges with X, the social media platform formerly known as Twitter. This situation is causing unease among Tesla supporters, who fear that Musk may be forced to liquidate more of his Tesla stock to fund his ailing project.

X’s Struggles Under Musk’s Leadership

Since acquiring Twitter for $44 billion in October 2022, Elon Musk has rebranded it as X, with visions of transforming the platform into a comprehensive “everything app.” However, X has struggled to meet expectations under Musk’s ownership, leading to a series of financial woes.

One of the most pressing issues has been a sharp decline in advertising revenue. According to reports, X has lost nearly half of its ad revenue since Musk took over, as advertisers became wary of the platform’s direction and controversies surrounding its content moderation policies. Elon Musk has been heavily criticised for his personal behaviour on the platform in recent months, which has significantly impacted X’s revenue streams, making it difficult for the platform to sustain its operations without additional funding.

Tesla Supporters’ Growing Concerns

The financial difficulties at X have not gone unnoticed by Tesla investors and supporters. Many are concerned that Musk’s commitment to X could have a negative impact on Tesla, particularly if he needs to sell more of his Tesla stock to keep X afloat. This concern is not unfounded, given Musk’s history of selling Tesla shares to fund his acquisition of Twitter.

In December 2022, Musk sold approximately $3.6 billion worth of Tesla stock, adding to the $15 billion he had already sold earlier in the year to finance the Twitter deal. These sales contributed to a sharp decline in Tesla’s stock price, which dropped by more than 60% over the course of 2022. Although Tesla’s stock has since rebounded somewhat, the possibility of further sales by Musk is a source of anxiety for investors.

A recent report by The Wall Street Journal highlighted this concern, noting that Tesla’s stock price tends to react negatively whenever Musk sells shares. Analysts have pointed out that Musk’s financial entanglement with X could lead to further liquidations, especially if X’s financial situation does not improve soon.

Expert Opinions and Market Reactions

Experts have weighed in on the potential implications of Musk’s involvement with X for Tesla. Dan Ives, a tech analyst at Wedbush Securities, warned in a recent note that “the Twitter nightmare continues as Musk uses Tesla as his own ATM machine to fund the red ink at Twitter.” Ives also suggested that further stock sales could be on the horizon, which could exacerbate the pressure on Tesla’s stock price.

Ross Gerber, a prominent Tesla shareholder and co-founder of Gerber Kawasaki Wealth and Investment Management, expressed similar concerns. In an interview with CNBC, Gerber stated, “The biggest overhang on Tesla’s stock right now is Elon selling more stock to fund Twitter. This is hurting Tesla’s brand, it’s hurting the stock, and it’s hurting Elon’s own wealth.”

The uncertainty surrounding X’s future and its potential impact on Tesla has already had a tangible effect on the market. Tesla’s stock has seen increased volatility in recent months, with analysts attributing some of this to concerns over Musk’s financial commitments. As of August 2024, Tesla’s stock is down approximately 15% from its peak earlier in the year, with investors keeping a close eye on Musk’s next moves.

The Road Ahead

While Elon Musk has demonstrated resilience and the ability to navigate financial difficulties in the past, the scale of these, one has to say, largely self-imposed challenges raises questions about how far he might go to keep the platform afloat.

For Tesla investors, the fear that Musk may need to liquidate more of his stock to fund X is a real and pressing concern. As X continues to struggle with declining revenue and operational challenges, the prospect of further stock sales looms large, potentially impacting Tesla’s stock price and the broader perception of Musk’s leadership.

Ultimately, the situation highlights the delicate balance Musk must maintain between his various ventures. As he juggles the demands of running Tesla, SpaceX, and X, the financial health of each enterprise becomes increasingly interlinked. For now, Tesla supporters can only watch and hope that Musk finds a way to stabilize X without further draining his Tesla holdings.