What a year for Elon Musk! In one year, the man who was the richest man in the world lost that status and saw his wealth melt from $270 billion to $140 billion. The main reason? Electric car maker Tesla, of which he is the main shareholder with 13% of the capital in addition to being the leader, saw its share price collapse by more than 69% during the year.
But if Elon Musk deserves the title of Person of the Year 2022, it is for his takeover of Twitter for $44 billion, filed in April. The takeover unexpectedly turned into a soap opera with many twists and turns, where the businessman tried to withdraw from the signing of the contract and overwhelmed the management of Twitter to the point where the case was brought to court, before finally taking control of the social. network to impose a brutal direction on it. Elon Musk, already more talkative than his fellow billionaires, has multiplied public statements to promote his conservative political ideas, sometimes at the expense of his portfolio of companies (Tesla, SpaceX, Neuralink and The Boring Company).
The image of the genius has been scratched since the takeover of Twitter
Elon Musk began the year boasting of the resounding successes of his two main companies, electric car maker Tesla and space company Space X, to the point where he compared himself to Tony Stark, the billionaire superhero and genius inventor behind the armor of Iron Man. So when he made his bid to become Twitter’s sole shareholder at a price of $54.20 per share, well above the market price, pundits looked for a logical explanation. Why would the genius businessman buy a company that has struggled for more than a decade to find its financial model? The billionaire remained very vague on the game, barely outlining a project – nicknamed X – which would consist of transforming the social network into a super-app through which payments would pass, like WeChat in China.
But no sooner had the billionaire arrived at the helm of Twitter than he began to describe it as a liquidity hole, in such dire financial straits that he would risk filing for bankruptcy – even though the company regularly manages to break even before redemption. With this justification, Elon Musk has repeatedly cut the group’s workforce to the point where he laid off more than 60%, closed offices overseas and revamped almost the entire management staff. All this by commenting on each decision with multiple tweets. As for the ambitious super-app project, it’s stuttering. The company immediately implemented the redesign of Twitter Blue (an 8 euro subscription that was supposed to serve as the cornerstone of the payment system), but had to withdraw it several times due to malfunctions before it was finally implemented a month and a half later.
Musk has built up an image of a hard worker for years, whom he trusts to demand intense work rhythms from his employees. Musk sleeps on the floor of Tesla factories, he gets involved in engineering and acts as the main lobbyist for his companies. His extreme method, instinctively, seemed to work: SpaceX’s reusable shuttles bring astronauts to the International Space Station, while Tesla has given a new dimension to the electric car market. But in the case of Twitter, Musk simply gives the impression of browsing by sight and picking up user posts unrelated to the company, which he calls ” interesting “.
Worse, the genius Elon Musk has revealed his mistakes. His speech at Twitter’s public audio conferences – Twitter Space – suggested a leader unable to respond to criticism preferred to leave the discussion or have his interlocutor expelled. The image of the billionaire suffered a crack, and the latter himself put the nail in the coffin: in December, he asked through a Twitter poll – which, by the way, does not respect any of the protections necessary to get rigorous results – if he could go . his position as head of the social network. 58% of the 17 million voting accounts (about 12% of his number of subscribers) have expressed their desire for him to leave. Elon Musk said that he would start looking for a person for the job, but that he would continue to take care of the software and servers, that is, the core value of the social network.
Tesla, neglected and in poor condition
Since the billionaire took control of Twitter at the end of October, Tesla’s stock has plunged 47%, falling below $200 for the first time since November 2020. For the year, that collapse increases to 69.5%. On the question: The new manager seems sucked in by political issues, and is accused of having abandoned the management of the car manufacturer. When he qualified himself” neither left nor right “, the powerful billionaire called to vote for the Republican camp during the US election on midway, and he spends his days commenting on and forwarding publications from the conservative camp. To support his ideological battle, he opened Twitter’s internal files to a handful of journalists. anti mainstream ”, with the aim that they reveal the inconsistencies and contradictions in the previous direction of the social network. Playing with the limits of conspiracy, the series of articles called Twitter Files looked at the banishment of figures from the American extreme right such as Donald Trump or even the censorship of disinformation about Covid-19.
This commitment is frowned upon by some of Tesla’s shareholders because the company is already in turmoil and does not need further controversy. First, its production has slipped in China, largely due to the government’s extreme anti-Covid policy, which has disrupted operations at its Shanghai gigafactory. After a brief return to normal, production will slow down again in January against the backdrop of a dramatic resurgence of the epidemic in the country. After that, his projects, like the Cybertruck and Roadster, announced for years, still don’t have a production date. Only the semi-trailer, announced three years ago, went into production. As for the Tesla series of cars, it receives updates, but it does not have a new flagship to highlight, while the historical manufacturers (Mercedes-Benz, Volkswagen, Hyundai, Kia…) are committed in its market segment that it Chinese market is starting to be invested by local manufacturers and that its direct competitors (Rivian, Lucid, etc.) are maturing.
Tesla is still the broad leader in its market (65% share, 14 points less than in 2020), but must prove in 2023 that it has the tools to remain so. And to achieve this, shareholders require a 100% committed Musk. The latter refuses to spread, but his numerous messages on Twitter suggest otherwise. It’s far from too late for Tesla to turn the corner: The company made $3.3 billion in profits in the third quarter, and while it may be missing its incredible 50% annual growth target, it remains on a positive trajectory nonetheless.
Neuralink and The Boring Company, two balls on the way?
But Elon Musk doesn’t just have the Tesla situation to deal with. As the gem loses its luster, its less successful investments become more visible. Starting with Neuralink, a company created in 2016, which aims to develop brain implants for neurological purposes, for example to combat paralysis. early December, Elon Musk has finally presented the next step for his ambitious project: the launch of human tests in the second quarter of 2023, although the company is still awaiting the necessary permits at the moment. But a few days after the presentation conference, Reuters revealed that the company was under federal investigation, prompted by reports of animal abuse. Specifically, Neuralink is accused of rushing its tests and thereby causing avoidable suffering and death to its test subjects. According to the news agency, at least 1,500 animals have died as a result of experiments since 2018, including 280 sheep, pigs and monkeys. If this number does not in itself constitute evidence of abuse, it is supported by internal testimonies, which make the connection between failed experiments and the pressure on the development of the product. Elon Musk is said to have repeatedly hinted to employees that Neuralink may shut down if progress does not come quickly enough. The company has already missed several deadlines and is slow to deliver.
Although Neuralink’s situation is not looking good, it is still doing better than The Boring Company. Also Founded by Elon Musk in 2016, this company builds tunnels with the promise of running autonomous high-speed buses through them to avoid traffic jams on the surface. Problem: The first project, a 1.7-mile tunnel inside the Las Vegas Convention Center, completed in 2020, was a failure. Initially, it is only available for a limited number of days and only for conference participants. Then the shuttles that circulate there are neither fast (50 km/h, far from the promised 240 km/h) nor autonomous, as they are simply Tesla Model 3 driven by drivers. Worse, congestion occurs in the tunnel at peak times, meaning that the project does not live up to its original promise. But it wasn’t until the end of November that The Wall Street Journal revealed the extent of the disaster.
American cities that had signed contracts with The boring company, when Los Angeles, Baltimore and Chicago had to abandon the construction of their tunnels. In the case of Chicago, Musk’s company asked for a budget expansion of $455 million, when the city was originally only supposed to pay $45 million. Other cities have simply been ignored by society despite their reminders. In other words, The Boring Company has grossly underestimated the cost of its projects in addition to grossly overestimating its production capacity, resulting in the cancellation of nearly all of its sites. Also, it no longer promises that its shuttles will be autonomous.
Fortunately, in Elon Musk’s corporate decline, one company remains untouched: SpaceX. In 2022, the company accelerated the deployment of its constellation of Starlink satellites, the largest of its kind, intended to provide internet to disconnected territories. The company has announced that it passed one million subscribers for its service in December 2022. Not enough yet to cover the cost of its investment – estimated in 2018 at more than ten billion dollars – but enough to demonstrate interest in the offer. But at the same time, Crew Dragon shuttles continue to ensure the rotation of the crew of the International Station: SpaceX has established itself as a must in the sector. And for now, Elon Musk’s setback is not affecting him.