We publish the objective news, period. If you want the facts, then sign up below and join our movement for objective news:


Latest News

Warren raises concerns about Tesla shareholders after Musk's Twitter buy

By Sarah May on
 December 20, 2022

Democrats have made no secret of their animosity toward Tesla and Twitter CEO Elon Musk, and Sen. Elizabeth Warren (D-MA) is now pushing the board of the former to take a closer look at whether his ownership of both enterprises is harming the automaker's shareholders, as The Hill reports.

The senator this week put her concerns in a letter to Tesla board chair Dr. Robyn Denholm and requested detailed answers to a series of questions regarding Musk's simultaneous priorities and whether serious conflicts of interests exist.

Warren sounds alarm

In her communication to Denholm, Warren expressed her worry that the Tesla board of directors may not be in compliance with its “legal duty” to monitor Musk's conduct as the publicly traded company's controlling shareholder and ensure that he is not using it as a “private plaything” with which to facilitate his plans for Twitter.

Warren suggests that recent months have witnessed “conflicts of interest, misappropriation of corporate assets, and other actions by Mr. Musk that appear not to be in the best interests of Tesla and its shareholders,” and outlines a number of areas in which she would like to receive further clarification of the board's vigilance in meeting its fiduciary duties.

The lawmaker began her laundry list of possible offenses by noting that “[a]ccording to press reports, '[t]o finance his Twitter deal, [Mr. Musk] loaded the company with $13 billion in debt, putting it on the hook to pay more than $1 billion annually in interest alone,'” a figure exceeding the company's 2021 cash flow.

Also on the list of Warren's red flags was her assertion that Musk may have committed securities law violations by using Tesla resources to support Twitter, something which may harm Tesla's profitability and hinder technological innovation at the company.

The Massachusetts Democrat noted that a significant number of Tesla employees – many with technical expertise – were marshaled to assist with the transformation of Twitter, something that, if not done pursuant to publicly disclosed agreements, would violate Musk's duty of loyalty to the automaker.

Conflicts raised

Warren also took the position that there are “unavoidable conflicts of interest” inherent in Musk's double roles, particularly when it comes to advertising revenue at Twitter.

“Twitter relies on advertising revenue from automobile companies that are in direct competition with Tesla, including Audi, Chevrolet, Ford, GM, Jeep, and Volkswagen,” Warren observed. “As the owner of Twitter, Mr. Musk may decide to run the company to maximize badly-needed revenue, even if that includes great deals for Tesla's competitors and potential injury to Tesla.”

Warren also posited that conflicts of interest could also rear their head in terms of the type of malicious content on Twitter that she believes is gaining traction since the takeover.

“[U]nder Mr. Musk's leadership, Twitter has welcomed hate speech and sharply increased use of racist language, while advancing a broader platform for Nazis, virulent sexism, and climate misinformation,” Warren alleged. “That association between Tesla's CEO and the actions of Twitter could have an impact on the Tesla band and its ability to market its vehicles to its target audience.”

Those specific concerns echo recent warnings from Rep. Adam Schiff (D-CA), who claimed that since Musk took the helm at Twitter, “Slurs against Black people have tripled – Slurs against women are up 33% – Slurs against Jewish people are up 61% – And slurs against gay men are up 58%,” a contention Musk himself directly countered, noting, “hate speech impressions are actually down by 1/3 for Twitter now vs. prior to acquisition.”

Stock prices cited

In support of her contention that the Tesla board has not taken sufficient steps to protect shareholders, Warren notes the dramatic drop seen in company stock prices, writing, “On April 25, 2022, Twitter announced that Mr. Musk would be purchasing the company, “using a financing plan” which included selling billions of dollars' worth of Tesla stock and using billions of dollars more as collateral on margin loans.”

She continued, observing that “[t]he day Mr. Musk announced the purchase of Twitter, Tesla stock was trading at $332.67 per share. The day he took over the company, Tesla's stock had declined by 32 percent to $228.52, and since then Tesla stock has dropped another nearly 30 percent, closing on December 13 at $160.95.”

“In a matter of months,” Warren added ominously, “Tesla shareholders have lost hundreds of billions of dollars.”

Response required

Warren concluded her letter to Denholm with a list of detailed questions regarding the steps taken by the board to fulfill its duty to shareholders, requesting that answers be provided to her office no later than Jan. 3 of 2023.

Tesla's board, for its part, did not provide an immediate response to Warren's concerns, and neither did Musk, on his own or through legal representatives.

Only time will tell just how doggedly Warren and the Democrats intend to probe these and other matters linked to Musk, but this forceful and highly pointed questioning of Tesla's board chair is likely a telling sign of things to come.