Published - May 12th, 2023 @ 10:15 AM (CET)

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Investors had concerns about Musk's divided attention affecting Tesla; this move relieved them.

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Tesla investors breathed a sigh of relief as Elon Musk, the CEO of Tesla, announced the appointment of a new CEO for Twitter, although he did not reveal who the new leader would be. This announcement led to a surge in Tesla's stock, satisfying its investors.

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Musk made the revelation via a tweet around 3:45 p.m. ET, stating, "Excited to announce that I’ve hired a new CEO for X/Twitter. She will be starting in ~6 weeks!” Following this tweet, Tesla's stock leaped approximately $3, finally closing up $3.54 or 2.1%, at $172.08. The S&P 500SPX, on the other hand, dipped by 0.2%. The Nasdaq CompositeCOMP saw an increase of 0.2%. Post-market trading saw Tesla shares rising another $1.20 or 0.7%, ending at $173.28 per share.
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The appointment could indirectly benefit Tesla shareholders by reducing Musk's need to sell Tesla stocks to cover Twitter losses.
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This development has relieved investors concerned about Musk's potential distraction due to his commitments to his social media platform. Tesla's stock was around $225 per share before Musk's takeover of Twitter, but by the end of 2022, shares had dropped to about $123, representing a fall of about 45% when the Nasdaq slid by around 3%.

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The impact of a CEO's distraction on a company's performance is challenging to quantify. Musk's involvement with Twitter has been ongoing for about a year. Without Twitter, Tesla could have expedited the production of a lower-priced model or the Cybertruck launch. However, these are speculative observations. Tesla did not respond to requests for comment on this matter.

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Nevertheless, Tesla and Musk appeared to acknowledge the issue of distraction. The March investor event by Tesla introduced several managers previously unknown to investors, giving them a first-time opportunity to assess the depth of Tesla's management bench.

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It's challenging to determine to what extent the underperformance was due to the automobile market, the broader economy, or Musk's acquisition of Twitter. Investors perceive the hiring of a new Twitter CEO as significant. Gary Black, Future Fund Active ETFFFND +0.26%  (FFND) co-founder and a Tesla shareholder, simply tweeted, "Awesome! Great for Tesla shareholders and great for Twitter."

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If Twitter performs better under the new CEO, this could indirectly benefit Tesla shareholders by reducing the need for Musk to sell Tesla shares to offset Twitter's losses. Musk's sale of stocks has been a considerable source of volatility for Tesla's stock, causing frustration among shareholders.

Tesla's stock has significantly increased in 2023, with hopes of continued growth and reduced volatility.

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In conclusion, Tesla's stock has significantly surged in 2023, growing by over 59%. As Musk steps back from his role as Twitter CEO, investors are hoping for less volatility and continued growth in the electric vehicle company.

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