Is Elon Musk getting too distracted to run Tesla? Experts weigh in

Elon Musk doesn’t just wear a lot of hats when it comes to juggling his many roles — he’s more like a hat rack overflowing with headwear.

Following the close of his deal to acquire Twitter (TWTR), Musk appointed himself the CEO of the company, as well as its lone board member.

Adding that his other day jobs as CEO of Tesla, CEO and chief engineer of SpaceX, in addition to his role as founder of companies like The Boring Company, Neuralink, and OpenAI, the question has arisen whether the mercurial and lone wolf Elon Musk has taken more than he can chew.

This is especially a concern for Tesla (TSLA), which is the biggest source of his net worth and has taken up much of his bandwidth of the past decade and a half. As the automaker gears up for its next phase of growth, many believe a focused Musk will be key for its success.

Even prior to the deal closing, several analysts and investors were already getting prickly about what they saw as Musk’s distractions potentially getting the better of him.

“I think it's fair to say he will be fairly distracted with probably putting more time behind Twitter and putting less time behind other things," MKM Partners senior analyst Rohit Kulkarni said on Yahoo Finance Live prior to the deal's close. Kulkarni said that Musk needs to put together a top-level C-suite team to run Twitter — and not run Twitter himself.

Mirabaud Equity Research analyst Neil Campling said that although Musk isn’t a one man show and has significant help at his companies, the issues at Twitter might be so demanding that they draw him in more than he would like.

“Twitter lacks direction, strategy and has no unique selling point. Now Musk is financially geared to Twitter… so he needs to find a way to monetize a product that has never been able to successfully generate sustainable revenue growth, profit metrics or user growth before,” Campling said to London-based financial publication CityWire.

On top of that, Tesla has its own issues to deal with. It has maintained its 50% CAGR (compound annual growth rate) for global deliveries indefinitely. Tesla is now facing increased competition in the U.S., Europe, and China, all the while trying to navigate economic headwinds stemming from the ongoing COVID-19 pandemic, supply chain shortages, and a rising rate environment.

There are also two huge product offerings coming soon, with the Tesla Semi slated to start deliveries on December 1st, and the Cybertruck on schedule to begin production in mid-2023, with full production reportedly beginning near the end of 2023.

Sanlam Global’s Chris Ford isn’t happy about recent developments with Musk and Twitter. Ford’s fund holds a $4.1% stake in Tesla.

‘Am I delighted? No. Would I prefer that [Musk] was clearly focused on the many things he already has to focus on? I suppose, at the margin, yes,’ Ford said.

Tesla investor Gary Black of the Future Fund is a noted Tesla bull — and he also isn’t happy either about Musk's foray into Twitter.

Last month, Black tweeted he was concerned that, “Elon’s core competency is engineering/tech; TWTR is an ad biz,” and also a loss in electric vehicle “SOV,” or share of voice, meaning media coverage is on Twitter and not EVs and Tesla at an important time.

Black also tweeted that if Musk “doesn’t appoint an ad CEO, this could be the worst deal since [TimeWarner]-AOL.”

“I was against him doing this deal, and still I think it's going to be a bad deal for him,” Black told Yahoo Finance on Tuesday.

From a Tesla shareholder point of view, Black says Musk “lending himself” as CEO to another company is something he’s done in the past and isn’t such a bad thing, but the case with Twitter is a different story.

“At the end of the day he needs to hire a CEO to run the business, it's going to take 80 hours a week or something like that to turn it around,” he says.

Will Musk return to his ‘first love’?

The issues even extend to Tesla itself, with resources like engineers and tech that Musk uses for when he sees fit. CNBC reported that not only were 50 Tesla engineers dragged into Twitter to help review code of Twitter engineers, but also that these Tesla engineers would be doing this in addition to their regular jobs in divisions like Tesla Autopilot and AI, and likely not be getting paid for the extra work. In addition, Tesla is known to code in Python, whereas Twitter engineers use Scala, the CNBC report said, meaning a tougher challenge for the engineers.

“Perception is reality. Everyone sees Elon Musk turning Twitter upside down overnight and believes he will lose sight of Tesla and his other complex businesses,” said Alyssa Altman, transportation and mobility lead at Publicis Sapient to Yahoo Finance.

Though the distraction fear is somewhat real at the moment, it may only be a short-term issue, Altman said. “The Twitter takeover is happening quickly, and he is setting the stage for how it will be run in days. Twitter will be a short-term distraction while he reshapes the leadership and then he will go back to Tesla.”

“He will keep his focus on building the Tesla platform business in the long-term,” she said. “The Tesla brand will sustain its prominence through the perceived Twitter distraction although the market may see it differently in the short-term.”

Future Fund’s Gary Black also sees Musk’s foray into Twitter as nothing but a short-term concern for Tesla shareholders. Tesla has “extraordinary fundamentals” right now, looks cheap from a valuation standpoint, and the Twitter overhang is now over. Soon Musk will return to his “first love,” as he calls it, which is Tesla.

“It will take a few weeks, then [Musk will] realize he’ll have to focus back on running the EV business,” Black says.

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Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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