Elizabeth Warren Criticizes Elon Musk over Twitter Acquisition Resulting in Inevitable Conflicts of Interest

Elizabeth Warren, a US Senator, has expressed her worries about the potential for conflicts of interest and potential legal problems for Tesla due to Elon Musk's recent takeover of Twitter.

 Robyn Denholm, Chair of Tesla (TSLA) was the recipient of a letter from a Massachusetts Democrat stating that shareholders of the electric car maker could possibly suffer detriment due to its CEO's possession of a Twitter account. Additionally, the letter questioned whether the board of Tesla (TSLA) is taking the necessary steps to address the issues that the social media platform presents.

 Warren queried the board of Tesla as to their handling of issues such as "conflicts of interest, misappropriation of corporate resources and other activities by Mr. Musk that do not appear to be in the best interests of Tesla and its shareholders."

 When contacted by The New York Times for a response to the letter, Tesla did not give one.

 Since Elon Musk's disclosure in the beginning of April that he had taken a large stake in Twitter, Tesla's shares have dropped a significant 58%. This selloff has caused the company to lose approximately $800 billion in market value. In recent months, Musk has sold off a fair bit of Tesla stock, including an additional $3.6 billion worth earlier this month. This has caused the entrepreneur to lose his title as the world's wealthiest individual.

 In her letter, dated Sunday, Warren pointed out that the acquisition by Mr. Musk caused unavoidable conflicts of interest.

 In the past, Warren has had disagreements with Musk and he pointed out that Twitter obtains monetary gain from General Motors, Ford, Chevrolet and other direct opponents of Tesla.

 Warren noted that, as the holder of Twitter, Mr. Musk might opt to direct the company to maximize profits, even if that means offering advantageous deals to Tesla's rivals and potential harm to Tesla. On the other hand, he might decide to manage Twitter in a way that benefits Tesla: for instance, he could modify the algorithms so that positive reviews of Tesla products get more visibility and criticism of them is minimized.

 Warren raised issues regarding if any laws regarding securities or other matters had been broken due to Musk's reported reallocation of Tesla's software engineers and staff to work on Twitter.

 Warren noted that the employment of Tesla personnel by Mr. Musk could be seen as him taking advantage of his position in a publicly-traded company to benefit his private enterprise, Twitter, which would be a breach of his legal responsibility of loyalty and could possibly break the anti-tunneling regulations meant to prevent corporate insiders from exploiting their firms.

 Warren urged Tesla's board to answer questions about its management of the situation by the 3rd of January, considering they are legally obligated to do so.

Downgrade of Tesla due to Musk's behavior reported

 Musk's utilization of Twitter has been met with intense criticism, with a Wall Street analyst warning that it has caused a decline in market sentiment towards Tesla and may lead to a reaction from advertisers and customers alike.

 Oppenheimer & Co. changed their opinion on Tesla, with the CEO being Musk, due to the dangers that may arise from the billionaire's control of Twitter as reported by CNN.

 According to Colin Rusch of Oppenheimer, Mr. Musk's control of Twitter's finances and user management could lead to a damaging cycle of advertisers and users leaving the platform. Rusch stated this in a letter to his clients.

 The firm predicted that a departure of sponsors could bring further financial collapse to Twitter, causing Musk to have to sell off more Tesla stock to cover the deficit.

Oppenheimer's downgrade was motivated in part by Twitter's choice to prohibit several reporters, among them Donie O'Sullivan of CNN, from their platform last week.

 CNN reported that Elon Musk offered some journalists he had blocked on Twitter the chance to come back if they deleted posts he incorrectly claimed were sharing his "exact-real-time location."

 In the opinion of Rusch of Oppenheimer, the varying criteria for Twitter users has caused a widespread public resentment of Musk that will ultimately have a negative effect on Tesla.

 Rusch commented that it was an excessive measure by Mr. Musk/TSLA to bar journalists from their platform without a consistent set of standards or proper notification amid increasing concerns about free speech. He further added that a majority of consumers, especially those who are in alignment with the mitigation of climate change, are unwilling to back Mr. Musk/TSLA due to this decision.

 Put another way, Musk's behavior has had a negative effect on the success of Tesla.

 Ross Gerber, an investor in both Twitter and Tesla, expressed hope over the weekend that Musk is able to locate a CEO for Twitter before the end of the first quarter of 2023.

 Gerber expressed on Twitter that it would be most beneficial for Tesla's shareholders if Elon returned to the company and worked full-time.

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