Rising backlash from Elon Musk‘s endorsement of anti-Semitic rhetoric has prominent advertisers suspending business at the billionaire’s social-media company and Tesla shareholders questioning his leadership of the electric vehicle maker.
This week, Musk endorsed a claim that Jewish communities are pushing hatred against whites in a series of post on X, the platform formerly known as Twitter. His remarks drew condemnation from the Anti-Defamation League, the White House, and others. And on Friday, some of the platform’s most prominent advertisers including Apple,
Disney,
Lionsgate and the European Commission suspended advertising on the platform.
Outrage also spread among
Tesla
(ticker: TSLA) shareholders.
Kristin Hull, founder of Nia Impact Capital, said she was “appalled” by Musk’s tweets and called on Tesla’s board to punish Musk.
“In any regular company, the board would be taking action,” Hull told Barron’s. “It’s their responsibility to look after [all] stakeholders.” That includes shareholders and employees as well as the community, she said.
“I don’t want to throw the baby out with the bathwater, but this is reprehensible,” she added.
On LinkedIn, Nia Impact Capital said in a statement: “The societal impacts cannot be separated from the financial outlook and bottom line for the companies of which Mr. Musk is a key figurehead.” The investment firm called on Tesla’s board to censure Musk, a move that could include “demotion, reassignment, suspension, or removal.”
Tesla didn’t respond to a request for comment about the call for a censure.
Gary Black, co-founder of the
Future Fund Active
exchange-traded fund (FFND), which holds Tesla stock, told Barron’s that Jewish clients reached out to him in “outrage” over Musk’s tweet.
When asked whether Musk’s recent tweets can hurt Tesla’s brand, Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, answered: “Umm, yes.” He added he believes Musk’s tweets are one reason Tesla has had to cut prices so aggressively to keep sales volume growing this year.
Gerber’s
AdvisorShares Gerber Kawasaki
ETF (GK) holds Tesla stock.
Tesla, X, and Musk didn’t respond to requests for comment about potential fallout for the two brands.
Some analysts said an advertising crisis at X could force Musk to sell Tesla stock to cover shortfalls at the social-media platform. Others noted this incident could lead to an even worse outcome: lasting damage to Tesla’s brand.
“This is new territory, for all of us, to have a founder CEO who was willing to ruin the [Tesla] brand,” Hull told Barron’s.
Shares of Tesla were off 2% in early trading Friday after falling 3.8% on Thursday, but recovered for a gain of about 0.3%. The
S&P 500
and
Nasdaq Composite
also eked out tiny gains on Friday.
Musk’s latest controversy started Wednesday afternoon when an X user who goes by the name “The Artist Formerly Known as Eric” wrote, in part, “Jewish communties [sic] have been pushing the exact kind of dialectical hatred against whites that they claim to want people to stop using against them.”
After the market closed that day, Musk responded on X: “You have said the actual truth.”
He then stated in another post that the Anti-Defamation League “unjustly attacks the majority of the West, despite the majority of the West supporting the Jewish people and Israel. This is because they cannot, by their own tenets, criticize the minority groups who are their primary threat.”
ADL CEO Jonathan Greenblatt on Thursday criticized Musk’s recent remarks in his own post on X. “At a time when anti-Semitism is exploding in America and surging around the world, it is indisputably dangerous to use one’s influence to validate and promote anti-Semitic theories,” Greenblatt wrote.
The White House weighed in as well. “We condemn this abhorrent promotion of anti-Semitic and racist hate in the strongest terms, which runs against our core values as Americans,” White House spokesman Andrew Bates said on Friday, Agence France-Presse reported.
Meanwhile, on Thursday, Media Matters released a report showing that ads from
Apple
(AAPL), NBCUniversal,
IBM
(IBM),
Oracle
(ORCL), and
Comcast
(CMCSA) were placed next to pro-Nazi content, even after X CEO Linda Yaccarino said that brands would be “protected from the risk of being next to” such content.
IBM in response said it would suspend all advertising on X while it investigates “this entirely unacceptable situation.”
Yaccarino tweeted late Thursday that the company strongly opposes all sorts of discrimination and has been clear about its efforts to fight anti-Semitism. “There’s no place for it anywhere in the world—it’s ugly and wrong,” she said. “Full stop.”
That didn’t stop major advertisers, including Disney and Lionsgate, from suspending advertising on X on Friday. Apple also withdrew from the platform, Axios and other media outlets reported, citing unnamed sources. Even the European Commission weighed in, instructing staff to avoid advertising on X, Politico reported Friday, according to an internal note it had obtained.
An advertising crisis at X could have implications for Tesla shares. Musk sold billions in Tesla shares throughout 2022 to help fund his purchase of the social-media platform. From the time he tweeted “I made an offer” for Twitter on April 14 until he said he was done selling stock in late December, Tesla shares fell more than 60%.
Stocks in general were falling at the time: The Nasdaq Composite was off more than 20% over the same span. But selling large blocks of shares, as Musk did to fund the acquisition, moves stock prices. And investors don’t want to add to positions if they know large stock sales are coming.
Write to Al Root at allen.root@dowjones.com
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