Elon Musk said he could step down as Tesla CEO

Elon Musk said he could step down as Tesla CEO

Elon Musk

A Wall Street Journal article indicated that Zachary Kirkhorn, the chief financial officer of Tesla, has been considered as a potential successor to the billionaire.

The last 48 hours have been a real roller coaster of emotions for Tesla investors and fans.

They went through different feelings.

Elon Musk said on May 11 that he had found a CEO to replace him at the helm of Twitter. The billionaire acquired the social network for $44 billion at the end of October. Since then, he has been completely focused on the platform to protect his investment, at a time when the economic downturn made advertisers more cautious.

The Techno King has thus devoted himself entirely to the Twitter revamp, with the aim of reducing dependence on advertising. In the second quarter of 2022, the last available data, more than 91% of Twitter’s revenue came from advertising.

Musk has bet everything on drastic cost reductions and subscriptions. In particular, he revamped Blue, Twitter’s subscription service, by integrating the blue account verification checkmark. This badge, which confirms the identity of the author of an account, was free on Twitter 1.0. By integrating it in into Blue, Musk also increased the price of the service, which now costs $7.99 per month for individuals and $1,000 per month for organizations.

Twitter vs. Tesla

All these efforts are good for the platform but negative for Tesla, which was thus abandoned by its charismatic leader to the chagrin of many shareholders. As a result, Tesla suffered a stock market bloodbath last year. The electric vehicle maker’s stock price fell 65% in 2022 despite strong fundamentals. This collapse provoked the ire of major shareholders like Leo KoGuan and Ross Gerber.

The latter did not hesitate to publicly criticize Musk, something very rare in the Tesla  (TSLA) – Get Free Report community. They held him personally responsible for the group’s stock market debacle.

“Elon has now erased $600 bil of tesla wealth and still nothing from the Tesla BOD (Board of Directors),” Gerber lambasted on Dec. 16 on Twitter. “It’s wholly unacceptable.”

Musk, who is a master tactician, knows how to read a situation. The tycoon said on Dec. 20, that he would step down as CEO of Twitter, after organizing a poll in which he asked users of the platform to vote whether or not he should continue to lead the company.

Nearly 18 million users voted and ‘yes’ won with 57.5% of the votes. Musk promised to abide by the result.

“I will resign as CEO as soon as I find someone foolish enough to take the job!” the billionaire said on Dec. 20. “After that, I will just run the software & servers teams.”

By revealing on May 11 that he had found his replacement, and by making her name official – Linda Yaccarino – the next day, Musk was no doubt expecting a positive reaction and applause from investors and Tesla fans, because the distraction that Twitter represented seemed to be over. But it was the opposite. The stock closed down 2.38% on May 12, the first trading session following the announcement of the change to come at Twitter.

How to explain the disappointment of investors?

‘Devote More Time to Tesla’

In fact, on the same day, the Wall Street Journal published an article titled: “The Executive Who Keeps Tesla Rolling Isn’t Elon Musk,” introducing Kirkhorn, 38, appointed chief financial officer by Musk in early 2019, as the shadow chief operating officer, comparing the two to Apple’s Steve Jobs and Tim Cook. He is admired inside Tesla, says the WSJ, because he knows how to navigate between the different demands of his very challenging boss. The very discreet Kirkhorn, who does not really mingle with financial analysts as most of his peers do, knows how to put into practice the vision of his boss.

“While Tesla has no clear second-in-command, Mr. Kirkhorn handles many day-to-day duties in the manner of a chief operating officer, former company executives said. Tesla board members have discussed Mr. Kirkhorn as a possible successor to Mr. Musk as CEO,” the newspaper said, citing a person close to the matter.

Last November, during his testimony in a trial in Delaware over the 2018 pay package the company granted to Musk, board member James Murdoch said that Musk has told Tesla’s Board of Directors that he has identified a potential successor to the CEO role.

The revelation came after Murdoch was asked by the plaintiff’s attorney whether Musk had ever identified someone to succeed him as CEO.

“He actually has,” Murdoch responded. He added that it happened in “the last few months,” but Murdoch didn’t provide the name of the potential successor.

The EV maker granted its co-founder a $56 billion compensation package, but Tesla shareholder Richard Tornetta sued Musk and the board to prove that the chief executive used his dominance to obtain the unheard of package, which also did not require him to work full-time.

Many investors are therefore worried that Musk, who encompasses Tesla’s vision, will give up his role as CEO.

“$TSLA -2.3% today despite TSLA naming a Twitter CEO and raising prices again because of WSJ story that @elonmusk may step down as CEO at TSLA and CFO Zach Kirkhorn could take over,” Tesla investor Gary Black lamented on Twitter on May 12. “While this story makes no sense, shorts running with it in front of next week’s Annual Mtg. Elon could squash this nonsense rumor with one quick tweet.”

“Elon, @elonmusk, please let @WSJ know you aren’t stepping down from being the CEO of @Tesla. These 🤡 belong in the circus 🎪” begged Eva McMillan, another Tesla shareholder.

Musk heard investors’ concerns and eventually addressed them. His answer is clear: he’s not about to pass the baton to anyone else at Tesla.

“Obviously, bringing on Linda [Yaccarino] allows me to devote more time to Tesla, which is exactly what I will be doing!” the billionaire said, ending a day of rumors.

The billionaire is expected to repeat this revelation at the Tesla annual shareholder meeting scheduled for May 16 in Austin, Texas, to completely neutralize speculation, in particular because he is also working on the development of TruthGPT, an AI platform intended to compete with the very popular ChatGPT.

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