Tesla, Inc. (NASDAQ:TSLA) CEO Elon Musk this week rebranded Twitter to X and also changed the bird logo to the letter “X.” Musk’s backers and critics took exception to the change on the premise that it might ward off advertisers.
What Happened: Future Fund’s Gary Black is among those who did not see it as a prudent move. He pointed to how WeChat, called Weixin in China, started as an instant messaging app in 2011, went on to add payments and e-commerce to its platform in 2013, all without rebranding.
“We’ll know if it was a good or bad decision 5 years from now,” he said.
In a separate tweet on Monday, the fund manager said “tossing out 17 years of Twitter brand equity in favor of undefined brand X – even to build a super app like Tencent’s WeChat – will further unsettle advertisers.”
Forrester Research VP & Research Director Mike Proulx said Monday in a report, that X will shutter or be acquired within the next 12 months.
“While Musk’s vision is to turn ‘X’ into an ‘everything app,’ this takes time, money, and people — three things that the company no longer has,” he said.
“Disenfranchised Twitter users will increasingly turn to Threads while Musk’s company continues to lose money. Simply put, X’s runway is coming to an end.”
What It Means For Tesla: Black, whose Future Fund has Tesla as its second-biggest holding, said the X brand doesn’t matter from Tesla’s valuation point of view.
The decision may in fact have an indirect impact on Tesla. As long as Twitter doesn’t turn cash-flow positive, there is the risk of Musk selling more of his Tesla shares to keep operations going, Black said.
A Tesla stock sale by Musk will have a psychological negative reaction as well as an actual depressing effect due to the increased supply of shares in the market.
Shares of the electric vehicle company are seeing a fits-and-starts recovery amid worries about margins as the company went on a price-cutting spree early this year and continued to offer copious discounts. The launches of Cybertruck and the Model 3 refresh are seen as potential catalysts that could give the stock a real upward thrust.
Tesla’s stock was up 0.43% to $266.43 during early trading on Wednesday, according to Zenger News Pro data.
Produced in association with Benzinga
The San Diego Monitor-News has been serving Black San Diego since 1986