Several Tesla Inc. shareholders rebuked Chief Executive Officer Elon Musk for endorsing antisemitic views on his social media platform X, with at least one saying he should be suspended.
“While I believe in free speech, there’s no excuse for the spreading of hatred by any CEO of any publicly traded company,” said Jerry Braakman, chief investment officer at First American Trust, which held about 16,000 Tesla shares as of Sept. 30. “Tesla’s board should place him on leave for a month or two.”
Investors may not go as far as saying they would reduce their holdings in the company, but many said they were taken aback after Musk agreed with a post that said Jewish people hold a “dialectical hatred” of white people.
“These types of comments can hurt the company’s valuation over the longer term if consumers don’t want to be associated with the brand,” said Gary Black, co-founder of Future Fund Advisors, which owned almost 106,000 shares of Tesla at the end of September. “Tesla’s customer base has a liberal bias, and these comments can alienate that base.”
Musk has a long history of promoting hate speech. His latest post has prompted widespread outrage from both politicians and some of the world’s biggest companies. The European Commission joined International Business Machines Corp. in deciding to stop advertising on the service formerly known as Twitter, and the White House condemned Musk, calling his comments “unacceptable.”
“I’ve never had this with any company I’ve ever invested in ever in my life where the CEO of the company himself does so many detrimental things that are destroying the brand,” said Ross Gerber, CEO and co-founder of Gerber Kawasaki Wealth & Investment Management, which owned roughly 400,000 Tesla shares at the end of September.
Tesla is Musk’s only publicly traded company, meaning it’s the one way investors can take a stance on the billionaire’s controversial actions. While Tesla’s electric vehicles have played a pivotal role in the shift to cleaner fuels, many sustainable investors have long avoided Tesla because of Musk and his company’s shortcomings in corporate governance.
Many investors hold Tesla shares via index-tracking funds, which means they can’t sell the stock. That makes Tesla less vulnerable to widespread divestments and ultimately helps support the stock. Shares of the company erased early losses to gain as much as 1.2% Friday.
Tesla ranks as the eighth-largest company behind Warren Buffett’s Berkshire Hathaway Inc. on the S&P 500, with a market value exceeding $740 billion. Musk has seen his personal fortune climb this year with a 91% advance in the company’s stock. He is the world’s richest person, with a net worth of roughly $218 billion, according to the Bloomberg Billionaires Index.
The outrage sparked by Musk’s decision to affirm a post accusing Jewish communities of hating white people has prompted some shareholders to call on Tesla to distance itself from its co-founder.
“The impact of erratic, racist, and antisemitic speech from a CEO directly affects Tesla’s brand and bottom line in significant ways,” said Kristin Hull, founder, and CEO of Nia Impact Capital, which owns Tesla shares and has waged pressure campaigns against the company for years, including via shareholder resolutions.
Hull wrote in an email Thursday that an appropriate response to Musk’s actions may include censure by Tesla’s board, demotion, re-assignment, suspension, or removal.
X Corp. Chief Executive Officer Linda Yaccarino said Thursday that the social media platform has been “extremely clear about our efforts to combat antisemitism and discrimination. There’s no place for it anywhere in the world – it’s ugly and wrong. Full stop.”
Musk didn’t respond to a request for comment.
Tesla shares have declined about 14% since mid-September after Musk dialed back growth expectations for the company as demand slows and other automakers issue dour outlooks.
The latest uproar comes as many of Musk’s businesses are struggling. Margins are declining at Tesla and revenue is plummeting at X. This weekend, Space Exploration Technologies Corp., or SpaceX, is expected to launch its deep-space Starship rocket system, roughly seven months after its first major test flight ended explosively in mid-air.
With assistance from Dana Hull.
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