Madelyn Streisfeld - Teen Aspect - August 13th, 2022
Last month, Tesla & SpaceX founder Elon Musk pulled out of his $44 billion deal to buy and privatize Twitter, after agreeing to absorb all of the company’s shares in April of this year. The mogul, with a net worth estimated at over $230 billion, will still be required to pay a $1 billion breakup fee.
It’s hard not to comment on the wasted billion in this transaction, which could have been spent on far more philanthropic causes. But the Twitter fake-out isn’t the first questionable choice in Musk’s spending history, once again calling into question the logic and morality behind his entrepreneurial decision-making.
In addition to strategizing plans to take over Twitter, Musk is also a frequent user of the social media platform, which he is notorious for abusing at times. Back in 2018, Musk tweeted that he had secured the funding to make Tesla a private company, thus defrauding investors. The US Securities and Exchange Commission fined him $20 million in response (Stempel, 2022).
His online mistakes have nearly cost him in other ways, such as when he was involved in a defamation lawsuit for referring to a diver who rescued the Thai soccer team from the cave in 2019 as a “pedo guy” (Hartmans, 2021).
Musk openly admits that even his successful business endeavors could have also landed him in economic trouble. According to CNBC’s Tom Huddleston Jr., Musk cites that “[He] gave basically both SpaceX and Tesla from the beginning a probability of less than 10 percent likelihood to succeed” (2018).
The failures of rocket launches almost led to SpaceX’s demise. But now, after becoming highly lucrative, SpaceX instead faces an abundance of social scrutiny. The company caters to only a small portion of the population, namely the wealthy upper class. Musk is one of several billionaire businessmen, alongside Jeff Bezos and Richard Branson, battling to capitalize on recreational space travel.
While Musk pours his own wealth into pioneering space tourism, he simultaneously fails to make public humanitarian contributions – even after promising to do so. In October of 2021, he tweeted that he would donate $6 billion if the United Nations’ World Food Programme (WFP) detailed how that money could be used to solve world hunger. Two weeks later, the WFP published a full plan.
In an article for ABC10, Emery Winter writes that Musk agreeing to buy Twitter was met with backlash because there is no evidence of Musk donating the aforementioned $6 billion to any charitable organization, despite claiming he would (2022).
The problem with Musk’s actions is that the reverberations are felt far beyond his bank account. In fact, because of his wealth, he typically ends up taking the smallest hit. Expecting mass layoffs if the purchase deal went through, Twitter employees began quitting and searching for other jobs, only for the deal to be broken. Also, immediately after Musk pulled out, the Twitter share price fell by 6 percent (De Vynck et al., 2022).
An examination of Musk’s actions shows the irrational nature of his spending, as a result of both his self-proclaimed impulsivity and immoral behavior. It is unclear if Twitter, which appears to be an underlying factor in much of his misconduct, will take further action against him now that the company has been thrown into disarray by the pulled purchase proposal. Either way, Elon Musk remains a case study for the importance of being cautious with words, both in the business world and beyond.
De Vynck, G., Lerman, R., Siddiqui, F. (2022, July 8). Elon Musk files to back out of Twitter deal. The Washington Post. Retrieved from https://www.washingtonpost.com/technology/2022/07/08/musk-deal-sec/
Hartmans, A. (2021, November 10). Elon Musk just lost $50 billion in 2 days, but he's still the world's richest person. Here's how the Tesla and SpaceX CEO makes and spends his $288 billion fortune. Business Insider. Retrieved from https://www.businessinsider.com/tesla-elon-musk-net-worth-2017-10
Huddleston Jr., T. (2018, March 13). Elon Musk: Starting SpaceX and Tesla were ‘the dumbest things to do’. CNBC. Retrieved from https://www.cnbc.com/2018/03/23/elon-musk-spacex-and-tesla-were-two-of-the-dumbest-business-ideas.html
Stempel, J. (2022, June 15). Elon Musk files appeal to end SEC decree over Twitter posts. Reuters. Retrieved from https://www.reuters.com/legal/transactional/elon-musk-appeals-decision-concerning-sec-settlement-over-twitter-posts-2022-06-15/
Winter, E. (2022, April 28). Yes, Elon Musk tweeted he would donate $6B to fight world hunger if UN met certain conditions. ABC10. Retrieved from https://www.abc10.com/article/news/verify/business-verify/elon-musk-indicated-2021-to-donate-6-billion-to-fighting-solving-world-hunger-if-un-met-conditions/536-cad0e59e-775d-4c3d-a309-b3ef93379a71