Elon Musk's Impact on Your Investment Portfolio

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Elon Musk's turbulent year may have negative implications for your investment portfolio.

In 2023, the richest man in the world, Elon Musk, has been repeatedly involved in controversial scandals, from endorsing and then apologizing for antisemitic tropes to re-platforming conspiracy theorist Alex Jones and making confrontational remarks to concerned advertisers, particularly Disney.

And hes suffered for them.

X, nee Twitter, is now projected to bring in significantly less than the $4.5 billion it earned in the year before Musk took over the company.

Musk mentioned in September that ad revenue had decreased by approximately 60%. At the DealBook conference in New York City in November, he warned that the decrease in ad revenue could lead to the failure of X, which would be a significant setback considering he had acquired it for $44 billion in October. If Musk is willing to risk wiping out $44 billion (equivalent to Bolivia's GDP), that is a matter between him and his private investors.

However, if the numerous controversies surrounding Musk begin to impact the value of Tesla shares, the issue becomes more significant.

As the CEO of Tesla, Musk plays a key role in the company, which is the seventh-largest company by weight in the S&P 500 with a market value of approximately $801 billion. This level of significance includes its inclusion in various indexes and ETFs tracked by major institutional investors across the country. Consequently, the majority of Americans with a 401(k) have investments in the company, and Musk's tendency to attract controversy could potentially harm their retirement savings.

Tesla's stock has seen a 106% increase this year, but has dropped by 7.5% in the last six months. While Elon Musk's public appearances may have contributed, other factors such as a recent 2 million car recall and narrowing profit margins also play a role.

Elon Musk did play a role in the decrease, albeit to a certain extent.

The value of Tesla stocks dropped during the week when Musk publicly supported an antisemitic conspiracy theory on X that is widely embraced by White supremacists, alleging that Jewish communities fuel "hostility towards Whites."

On November 30, shares dropped by approximately 2% following Musk's profanity-laden outburst against X advertisers. A study conducted by Jauron Gunther Dam at Georgia Southern University observed that Tesla's stock price was negatively affected by a higher volume of tweets from Musk.

Shareholders are increasingly voicing their doubts about Musk's effectiveness as a leader at Tesla. Jerry Braakman, president of First American Trust, has called on Tesla's board to clearly communicate that Musk's amplification of an antisemitic post to his millions of followers on X was excessive.

Braakman stated that while free speech is important, there is no justification for a public company CEO to spread hate. Additionally, a group of progressive Tesla shareholders recently urged the board of directors to request that CEO Elon Musk focus more on running the EV automaker.

On top of his responsibilities at Tesla and X, Musk also heads SpaceX, the Boring Company, and Neuralink, among other ventures.

The group alleged that Musk is neglecting the company's pressing issues, such as growing competition in the EV market and addressing concerns raised by the group, including reports of a harmful work environment at Tesla.

Amalgamated Bank, a union-owned bank, along with Sisters of St. Joseph of Carondelet, United Church Funds, Investor Advocates for Social Justice, and the New York City Comptrollers Office have all endorsed the letter. In the letter, the signatories, who collectively own $1.5 billion worth of Tesla shares, which is less than 1% of the company, express their concerns. Additionally, a survey conducted by the Yale School of Management in late 2021 found that 79% of 100 CEOs believed that Musk had become detrimental to the value of his companies.

Tesla experienced a significant decline in its reputation among investors this year, as revealed by a recent Axios Harris Poll on the 100 most visible brands. The company plummeted from 11th place in 2022 to 62nd place. FTX, led by Sam Bankman Fried, was the only other company that experienced a more drastic decline.

During Tesla's annual meeting this year, shareholders proposed a report to be prepared by the board identifying key individuals, including Musk, whose behavior significantly impacts the company's financial performance.

Still, Musk says he isnt going anywhere. "It aint so," he said when asked about stepping down at Tesla earlier this year.

2022 had the lowest total unemployment rate ever

In 2022, there was a significant increase in the labor market, leading to a trend of quiet quitting and the great resignation. New government data released this week highlights the strength of the record-breaking job market in 2022, with the annual jobless rate falling to 7.6%, according to the "Work Experience of the Population" report from the Bureau of Labor Statistics.

My colleague Samantha Delouya reported that the latest report released on Tuesday shows the lowest annual unemployment rate on record. Although the Bureau of Labor Statistics releases employment data monthly, this report offers a comprehensive overview of the labor market for the entire year of 2022.

Despite a slight cooling in the labor market in 2023, it has shown resilience even with the Federal Reserve raising interest rates to the highest level in 22 years to control demand and decrease inflation. In November, the unemployment rate fell from 3.9% to 3.7% and the US economy added 199,000 jobs, as reported by the BLS.

Ikea facing delays, disruption due to Red Sea attacks

Ikea has announced that it anticipates delays and potential availability limitations for specific products due to the continued assaults on vessels in the Red Sea by Houthi rebels, as reported by my colleague Catherine Thorbecke.

The Suez Canal situation is expected to cause delays and potential availability issues for specific IKEA products, according to a statement from Inter IKEA Group, the parent company of the Swedish furniture giant, given to CNN on Wednesday.

The statement also mentioned that they are actively communicating with their transportation partners to prioritize the safety of their employees within the IKEA value chain and to implement all essential measures to ensure their well-being, emphasizing that this is their top priority.

Ikea's statement follows announcements from other major companies such as the oil giant BP and shipping giant Maersk, who have declared a temporary suspension of their operations in the Red Sea due to ongoing attacks on vessels by Houthi rebels. The Yemen-based Houthi militants, supported by Iran, have claimed responsibility for the attacks as retaliation against Israel's military campaign in Gaza. In the past month alone, the rebels have carried out over 100 strikes on a variety of commercial and merchant ships in the Red Sea.

The Red Sea hosts a vital maritime trade route and at least 44 countries have ties to ships targeted by Houthi militants. Credits to Matt Egan and Chris Isidore for their contributions to today's newsletter.