Tag: Elon Musk

By Glenn Chapman for IOL

Elon Musk on said Tuesday that as owner of Twitter he would lift the ban on Donald Trump, contending that kicking the former US president off the platform “alienated a large part of the country”.

Musk’s endorsement of a Trump return to the global messaging platform triggered fears among activists that Musk would “open the floodgates of hate”.

“I would reverse the permanent ban,” the billionaire said at a Financial Times conference, noting that he doesn’t own Twitter yet, so “this is not like a thing that will definitely happen.”

Trump has stated publicly that he would not come back to Twitter if permitted, opting instead to stick with his own social network, which has failed to gain traction.

The Tesla chief’s $44-billion (around R707 billion) deal to buy Twitter must still get the backing of shareholders and regulators, but he has voiced enthusiasm for less content moderation and “time-outs” instead of bans.

Trump was booted from Twitter and other online platforms after supporters fired up by his tweets and speech alleging election fraud attacked the US Capitol on January 6, 2021 in a deadly bid to stop Joe Biden from being certified as the victor in the US presidential election.

“I think that was a mistake because it alienated a large part of the country, and did not ultimately result in Donald Trump not having a voice,” Musk said.

Musk maintained that permanent bans undermine trust in Twitter as an online town square where everyone can be heard.

“Elon Musk would open the floodgates of hate and disinformation on Twitter,” said Media Matters for America president Angelo Carusone.

“Whether Elon Musk is a fully red-pilled right-wing radical or just someone very interested in enabling right-wing extremists, the result is the same.”

The American Civil Liberties Union (ACLU), however, backed Musk’s perspective.

“Elon Musk’s decision to re-platform President Trump is the right call,” said organisation director Anthony Romero.

“Like it or not, president Trump is one of the most important political figures in this country, and the public has a strong interest in hearing his speech.”

Romero pointed out that some of Trump’s controversy causing tweets have wound up being evidence in lawsuits against the former president by the ACLU and others.

Musk reasoned that permanent bans at Twitter should be rare, and reserved for accounts that are spam, scams or run by software “bots.”

“That doesn’t mean that somebody gets to say whatever they want to say,” Musk said.

“If they say something that is illegal or otherwise just destructive to the world, then there should be a perhaps a timeout, a temporary suspension, or that particular tweet should be made invisible or have very limited attraction.”

Ad boycott?

Activist groups have called on Twitter advertisers to boycott the service if it opens the gates to abusive and misinformative posts with Musk as its owner.

“Under Musk’s management, Twitter risks becoming a cesspool of misinformation, with your brand attached,” said an open letter signed by more than two dozen groups including Media Matters, Access Now and Ultraviolet.

Twitter makes most of its revenue from ads, and that could be jeopardized by advertisers’ reaction to content posted on the platform, the San Francisco-based tech firm said in a filing with US regulators.

“We believe that our long-term success depends on our ability to improve the health of the public conversation on Twitter,” the company said in a regulatory filing.

Efforts toward that goal include fighting abuse, harassment, and spam, Twitter told regulators.

“Elon Musk owes the world a better explanation of how the platform will deal with the likes of Trump than an edict that his ouster was wrong because it proved unpopular in some places,” said Suzanne Nossel, chief of human rights nonprofit PEN America.

The Knight Foundation said that a survey it commissioned found that only 41 percent of adults in the United States believe Trump was deprived of free expression rights by social media platforms that banned him.

“People died because of Donald Trump’s Twitter account,” said Muslim Advocates senior policy counsel Sumayyah Waheed.

“I’m terrified of what else would be allowed under Musk’s watch.”

 

Elon Musk buys Twitter for R690bn

By Kyle Venktess for IOL

In one of the most controversial social network acquisitions, billionaire-businessman Elon Musk took sole ownership of Twitter on Monday night – meaning the platform could soon see changes.

This brings control of one of the most influential platforms, used by hundreds of millions, to one person – the world’s richest person.

Musk, who purchased Twitter for $44 billion (R690bn), just 16.7% of his net worth, has over the months prior to the acquisition described user-friendly tweaks to the service. These include an edit button and defeating “spam bots” that send overwhelming amounts of unwanted tweets. However, there is a lot more that users can expect.

The transaction comes on the tail-end of a barrage of tweets relating to changes Musk suggested for the platform.

Even though Musk has been tweeting of what he would like to see, Reuters reported Twitter Inc chief executive Parag Agrawal telling employees on Monday at a townhall-like meeting shortly after the announcement that the future of the social media firm is uncertain. However, he allayed fears that there would be any layoffs.

While seemingly positive changes are expected to brace the platform, one of the critical highlights came from Musk’s reaffirmation of prioritising free speech on Twitter.

Will this mean that former US president Donald Trump, banned for life from the platform, will return? Well, even if Musk gave him the green light, Trump reportedly said he would not return.

Musk has been often outspoken in criticising the platform for its moderation. In a tweet shortly after the buyout, Musk said: “I hope that even my worst critics remain on Twitter because that is what free speech means.”

Shortly after that, Musk posted a statement reading: “Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated.”.

He also said: “I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans.”

Musk previously touted the idea of an open-source algorithm to better service free speech on Twitter, meaning the platform could see changes to users’ content feed and moderation of tweets, among others, in the near future.

However, opening source coding is just one of the suggested changes previously made by Musk.

IOL Wealth previously reported Musk’s tweets, suggesting ideas to transform the platform. Among the changes, Musk also toyed with the idea of offering users a premium, subscription-based version on the social network, accompanied by a blue tick.

This means users may soon be able to buy their verification on the social network, effectively making the platform one of the only major social networks to do so.

“Everyone who signs up for Twitter Blue (i.e. pays $3/month) should get an authentication checkmark,” Musk previously said in a now-deleted tweet.

Musk followed up the tweet with a post in which he suggested a monthly fee estimated at $2 per month, just over R31 at the time of publishing.

On Monday night, Musk took ownership of the social network ending Twitter’s run as a publicly-listed company since its IPO in 2013. The transaction resulted in a 6% share increase following the news.

Earlier this month, Musk became a major Twitter shareholder acquiring more than 9% of the social network’s shares.

 

Elon Musk may create social media platform

Source: Bloomberg

South Africa-born entrepreneur and Tesla chief executive Elon Musk said in tweets that he is giving serious thought to creating a social media platform because Twitter is “failing to adhere to free speech principle”.

“Given that Twitter serves as the de facto public town square, failing to adhere to free speech principles fundamentally undermines democracy,” Musk tweeted Saturday.

He said in an earlier tweet on Friday that “free speech is essential to a functioning democracy,” and he questioned if Twitter “rigorously adheres to this principle.”

Last week, the US Securities and Exchange Commission told a judge that Musk’s tweets about Tesla would remain a valid subject for government investigation even if a court throws out his 2018 agreement with the SEC.

Musk is seeking to end oversight by the SEC of his Twitter posts, claiming the agreement is being used to “trample” his rights to free speech.

The Tesla chief executive is also asking the court to block a subpoena by the securities regulator for documents relating to the review of his tweets.

Under the SEC settlement agreement, the regulator will distribute funds from the company and Musk to investors who lost money buying Tesla shares after Musk claimed on Twitter he was thinking about taking the company public.

Source: EWN

Elon Musk, the charismatic chief of electric automaker Tesla, has overtaken Bill Gates to become the world’s second richest person, according to the Bloomberg list of billionaires.

The South African-born Musk, 49, added $7.2-billion in wealth on Monday alone following Tesla’s latest surge. He now has an estimated $128-billion.

The outspoken Musk, who is also cofounder of SpaceX, had already overtaken numerous luminaries in recent weeks, including Facebook Chief Executive Mark Zuckerberg and Bernard Arnault, the head of French luxury giant LVMH.

Now the only person he stands behind is Amazon founder and CEO Jeff Bezos, whose wealth is estimated at $182 billion.

The upheaval of the coronavirus pandemic has allowed the ultra-rich to amass even more wealth as technology companies have gobbled up more market share of the economy.

In 2020, Tesla shares have surged more than 500% and the company is now valued at more than $500-billion.

Musk, who owns about 18% of the shares, has made some $100-billion during this stretch.

Tesla shares have gained further since the presidential election of Joe Biden, who favours more aggressive policies to address climate change. Tesla was also boosted by an announcement that it is being added to the prestigious S&P 500 index.

 

By Molly Smith/Bloomberg for Fin24 

One hundred and forty-three days. That’s how much time Elon Musk has till the big bills start coming due in the debt market.

That, in truth, wouldn’t be considered a ton of time in most circumstances. But in 2018, with capital markets still minting bonds and loans by the trillions, it’s still relatively comfortable runway for a company like Tesla to secure a financial reprieve.

So, despite all the hand-wringing over the manufacturing setbacks and the perplexing Musk tweets and the run-ins with regulators, Tesla’s stock still trades at astronomical valuations and its bonds show almost no concern of a default in the near term.

For now, at least. The question is whether Musk can use these 143 days to appease the Securities and Exchange Commission with changes to Tesla’s board – including his own removal as chairperson – and then start producing electric cars fast enough to generate the cash needed to either start paying back those debts outright or convince creditors to roll them over.

Third-quarter production numbers were solid, with Tesla hitting its target for its crucial Model 3 sedan, but that growth needs to be sustained in the months ahead.

“The market isn’t indicating there’s any imminent danger, they have time,” said Chris Hartman, a senior portfolio manager at Aegon Asset Management. “It’s only five months, but as long as there isn’t some global liquidity crisis, they should be able to access the capital markets, albeit at a much higher rate, to keep the story alive.”

Representatives for Palo Alto, California-based Tesla didn’t respond to requests for comment.

More than $1.5bn out of Tesla’s total debt of $11.5bn is coming due in the next 13 months. Some of the first maturities actually fall over the next few weeks but the first payment of real consequence comes due on March 1: a $920m convertible bond with an equity-conversion price set at $360.

With the stock trading now at a mere $262, it seems unlikely that investors will be able to swap into the shares, meaning that Tesla will be on the hook to pay the money back.

With the stock trading now at a mere $262.80, it seems unlikely that investors will be able to swap into the shares, meaning that Tesla will be on the hook to pay the money back.

Credit markets, for now, are taking that in stride. Tesla’s 5.3% bonds due 2025 are now yielding more than 8%, in line with other debt with similar CCC ratings, according to Bloomberg Barclays index data.

But there are signs of doubt: More creditors are hedging their bets in the derivatives market. It now costs almost $2m upfront to insure $10m of Tesla bonds from default over five years in the credit derivatives market. Just two months ago, the upfront cost was less than $1.3m.

Tesla has put its investors through the wringer with a series of high-profile departures, persistent operational challenges, and most recently, a lawsuit from the SEC that threatened to remove Musk, the visionary who has become synonymous with the Tesla name, from the company entirely.

He settled that case late last month by agreeing to pay a $20m fine, appoint a new chairperson to the board and add two independent directors.

To the relief of investors, he was allowed to stay on as CEO. (Days afterward, Musk unnerved investors again by expressing his frustration with the settlement – which isn’t final yet – in a tweet that mocked the SEC.)

Expensive financing

Musk has said that Tesla won’t need to raise more money as it will generate positive free cash flow in the second half of this year and crank out sustainable profits for the first time in its 15-year history.

In any event, there are no good financing options right now anyways. The most likely, according to Bloomberg Intelligence analyst Joel Levington, would be the sale of another convertible bond or a capital raise in the equity markets.

The sale of collateralised debt – typically a cheaper form of financing – would be possible too, but such a transaction would likely rattle existing bondholders because the new creditors would jump ahead of them in the repayment line, Levington said.

All of which just underscores the urgency of Musk’s efforts to sell more cars and start generating steady profits before the first of those big bills comes due.

By Tom Schoenberg, Greg Farrell and Matt Robinson for Fin24 

All it took to draw the US Justice Department into investigating Tesla was a single tweet by chairperson Elon Musk. But now that prosecutors have a toehold, they can dig in to look for other signs of misconduct at the electric-car maker.

The investigation is in its very early stages and where it leads is anyone’s guess. Many securities fraud probes over the years have started with a bang like the one that knocked as much as 6.6% off Tesla’s shares with Bloomberg’s report of the probe on Tuesday.

Some of those are flash news reports that trickle off without charges. At the other extreme are companies like Theranos, which pumped up its valuation with what the government said were false promises, leading to charges against founder Elizabeth Holmes and another senior executive.

“Criminal investigations are never good if you’re a public company because they open up a Pandora’s box and prosecutors will follow threads wherever they lead,” said Paul Pelletier, a former Justice Department prosecutor.

Tesla co-operating

Tesla said it’s co-operating with the Justice Department, noting that it received queries but no subpoena. The initial scrutiny surrounds Musk’s tweet on August 7 that he had money lined up to take the company private. Shares jumped. Later, he and his board said there was no formal proposal for the funding and they abandoned the plan.

The Securities and Exchange Commission quickly opened a civil investigation into the tweet and issued a subpoena for information, people familiar with the matter told Bloomberg.That was followed by the Justice Department probe. Neither the SEC nor federal prosecutors have accused Musk of any wrongdoing.

To prove criminal securities fraud, prosecutors would have to show not only that Musk’s statements were false, but that they were made willfully. That would require establishing that Musk purposely planned to inappropriately drive the shares higher or prevent them from going lower.

One area investigators would look for such evidence is in emails or other internal documents, according to former federal prosecutors.

Musk has often vented his frustrations with short sellers on social media. In May, Musk tweeted that he was expecting the “short burn of the century” and suggested that investors who were betting against the company start “tiptoeing quietly to the exit …”

The “funding secured” tweet did in fact trip up bearish sellers when the company’s shares rallied more than 10%. Government investigators will be trying to determine whether there was any connection to that statement and his desire to hurt short sellers.

Once federal prosecutors begin looking into Musk’s comments, they may also examine other things, including why the company’s new chief accountant picked up and left after just a month on the job – though he said at the time he had “no disagreements with Tesla’s leadership or its financial reporting.”

Under securities fraud laws, prosecutors could go back five years and more if they find evidence of a conspiracy.

Very often what starts out as an investigation of one subject takes a completely different turn, said Michael Koenig, who prosecuted former Qwest CEO Joseph Nacchio for insider trading.

‘Wait a minute’

“When we were investigating Qwest, we initially thought there were accounting fraud and revenue recognition type issues,” said Koenig, now a partner at Hinckley, Allen & Snyder. “As we started digging into it, however, we realised, ‘Wait a minute. Joe Nacchio is selling large amounts of his stock at the same time he’s telling the general public that the company is doing great, when he knew it was not.’”

Nacchio served four years and five months in prison after his 2007 conviction in the case.

A more recent example, according to Koenig, is the Hillary Clinton email investigation, which was reopened by the FBI after agents came across possible undiscovered evidence while investigating former New York congressman Anthony Weiner for sexting with a minor.

The lack of a subpoena from the Justice Department doesn’t mean its investigation is limited, according to Pelletier. Prosecutors can piggyback on the SEC’s subpoena to get a hold of whatever information Tesla discloses, obviating the need to issue a grand jury subpoena of its own, he said.

“That’s the normal course of action when the SEC has already issued a subpoena,” Pelletier said.

The SEC already was investigating whether Musk’s vehicle production forecasts misled investors before the regulator started scrutinising whether he had secured funding for a Tesla buyout, Bloomberg News reported on August 9.

Some of Musk’s predictions have been way off. Musk said during a May 2016 earnings call that, during the second half of 2017, he expected Tesla would produce 100 000 to 200 000 Model 3 sedans – the lower-priced car that’s pivotal to the company generating profit. Tesla ended up building fewer than 3 000 Model 3s in last year’s second half.

The Justice Department’s interest in Tesla isn’t good for investors, who saw the company’s share price drop just after the investigation was revealed. But the probe doesn’t mean that Palo Alto, California-based Tesla will go the way of Theranos.

Unlike Theranos, Tesla manufactures popular automobiles. While the SEC and the Justice Department might find that the company and some of its executives exaggerated Tesla’s financial performance, government officials would probably be hesitant to inflict a critical blow on a company that employs more than 35 000 people globally.

The nature and depth of any exaggerations by Tesla will ultimately determine how the company is treated.

If Musk’s conduct at Tesla is deemed to be a case where the CEO’s unregulated passion led him to hyperbolic claims, the resulting penalties are likely to be serious, but measured. But if evidence emerges that a win-at-all-costs mentality from the top led some executives to cook the books, the penalties could be severe.

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