The new attempt to invalidate the agreement with Twitter may bring the Tesla boss funding problems in the future
How far are Elon Musk and his corporate adversary, Twitter, willing to go before reaching a consensus to cancel their deal? The Tesla boss has resorted to a lawsuit in a new effort to extricate himself from his $44 billion deal with the social media company. This complicates things for Twitter, but Musk, by hitting former Silicon Valley allies with subpoenas, is risking more.
On Monday, Musk’s lawyers sent the social network a second letter terminating the agreement to include allegations from Peiter Mudge Zatko, Twitter’s former chief of security. He accuses his former employer of egregious shortcomings in his defense against hackers, among other things. He is now scheduled to testify before Congress in September. Even if the Musk deal doesn’t go through, Twitter has more questions to answer.
But the way Musk has handled the deal has dragged in many of his friends in the tech business. Twitter has served subpoenas on Musk’s co-investors in the purchase, including Oracle founder Larry Ellison, who is a member of Tesla’s board of directors, and Musk’s venture capital firm Sequoia, an investor in SpaceX.
He even sent a subpoena to his friend, Twitter co-founder Jack Dorsey, who had discussed with the businessman the possibility of taking the social network private. Twitter’s banks Goldman Sachs and JP Morgan, along with Musk’s funding company Morgan Stanley, have also received subpoenas.
Musk might need them later. His main day job, running Tesla, depends on his ability to get ahead and get funding. The estimated price-earnings ratio for Tesla in the next 12 months is 52, or eight times more than other car companies such as Ford Motor and General Motors, according to Refinitiv. This is partly due to Tesla’s track record, but Musk also wants to expand Tesla’s sales to 20 million vehicles a year by 2030.
That’s about 10 times the planned capacity by the end of this year and the largest expansion ever projected by a capital-intensive automaker. The total cost could be as high as $600 billion, including materials, according to a Reuters analysis.
Musk’s friends in Silicon Valley can still bet on one of his startups, or an old one. But if you’re worried that you might later receive a subpoena and a blow to your own reputation, you might think twice.