Elon Musk found a CEO for Twitter.
Tesla
investors are happy.
The Tesla (ticker: TSLA) CEO tweeted on Friday that Linda Yaccarino, the former head of advertising at NBCUniversal, will take the top job, following up on a post Thursday saying he had found a successor but without giving a name. NBCUniversal said earlier Friday that Yaccarino was leaving the company.
“Excited to announce that I’ve hired a new CEO for X/Twitter,” Musk’s Thursday tweet said. “She will be starting in ~6 weeks!”
The news was a relief for Tesla investors. Tesla stock closed up $3.54, or $2.1%, at $172.08. on Thursday, but the gain faded on Friday. In early afternoon, the stock was down $4.40, or 2.6%, at $167.68, while the
S&P 500
and
Nasdaq Composite
were off about 0.6% and 0.9%, respectively..
Investors have worried about the issue of Musk being too busy with, or distracted by, his social media platform. Tesla stock was about $225 a share before Musk took over Twitter, but the shares closed out 2022 at about $123, falling about 45% over a span when the Nasdaq dropped about 3%.
Management distraction and how it affects a company are difficult to measure. Musk has been involved with Twitter for about a year. It’s possible that if he hadn’t been, Tesla would have developed a lower-priced new model more quickly, or a be closer to launching the Cybertruck, but that is only speculation. Tesla didn’t respond to a request for comment.
Tesla and Musk did seem to be aware of investors’ concerns about distraction. Tesla’s March investor event featured a lot of managers whom investors hadn’t heard from, giving the public a chance to evaluate the depth of Tesla’s management talent.
How much of Tesla stock’s underperformance was related to the car market, the overall economy, or Musk’s Twitter purchase is hard to say, but investors are viewing the hiring of Twitter CEO as a big deal. “Awesome!”
Future Fund Active ETF
(FFND) co-founder and Tesla shareholder Gary Black tweeted on Thursday. “Great for Tesla shareholders and great for Twitter.”
Black told Barron’s the decision to hire a CEO could be worth 3% to 5%, or roughly $5 to $9 a share, for Tesla stock in the short run. “It’s still six weeks away,” adding that the news “suggests Twitter has to be doing much better.”
Wedbush analyst Dan Ives was a little more bullish than that, saying the decision could eventually be worth $15 to $20 a share. That’s another $10 to $15 beyond what happened late Thursday and Friday morning. It’s “key for Tesla stock around distraction risk,” Ives told Barron’s. He rates Tesla shares a Buy and has a $215 price target on the stock.
Ives also says that Yaccarino is a good choice. “While overseeing billions in annual ad revenue and keeping tight relationships with marketers and ad agencies globally, we believe that this [is] a homerun hire for Twitter,” wrote Ives in a Friday report.
Twitter performing better as Black suggested, would benefit Tesla shareholders in another tangential way, by lessening pressure for Musk to sell Tesla stock to fund losses at Twitter. Musk stock sales have been a frustrating source of volatility for Tesla shareholders.
“I am confused to why [Tesla’s] board of directors allowed Elon to crash Tesla stock price,” Leo Koguan, one of Tesla’s largest individual shareolders, told Barron’s recently. He was buying stock while Musk was selling shares at the end of 2022.
Koguan also pointed out that the
Disney
(DIS) board made a CEO change and that the former CEO hadn’t been “working in another company full time.”
Musk, however, has always had more than one job while running Tesla. Investors hadn’t complained much before he bought Twitter.
Write to Al Root at [email protected]
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