Stock Plunge and Litigation Risks... Musk in a Dire Situation

Twitter sued for "unfair dismissal"
Investors turn away, demand "governance restructuring"

[Asia Economy Reporter Yujin Cho] Twitter, a social media company led by CEO Elon Musk, has become embroiled in litigation risks related to the mass layoffs conducted last month. Tesla, whose corporate value is falling in real time due to the 'Twitter risk,' has seen its stock price plummet to levels from two years ago. As repeated adverse events raise concerns about Musk's autocratic and impulsive management style, even friendly investors are turning away.

On the 20th (local time), major foreign media reported that about 100 former Twitter employees have initiated legal proceedings demanding compensation through third-party arbitration, citing unfair dismissal and other reasons. They claim that during the large-scale layoffs conducted by the company last month, female employees were discriminated against in dismissals, and employees on sick leave or parental leave were illegally terminated. They also alleged that promised severance pay was not provided.

Attorney Reese Riordan emphasized, "Twitter, acquired by Musk, is engaging in unbelievably unfair labor practices," adding, "We will pursue every possible method to protect workers and secure compensation from Twitter."

Foreign media reported that this arbitration request is similar to four class-action lawsuits pending in the California District Court concerning gender discrimination dismissals and unfair dismissal of disabled employees.

In these class-action lawsuits, the plaintiffs claim that Twitter dismissed full-time and contract employees without the 60-day prior notice period and forcibly removed disabled employees by refusing remote work. Currently, three complaints related to Twitter's illegal dismissals have been filed with the California courts and labor commissions.

[Image source=Reuters Yonhap News]

Ross Gerber, a longtime Tesla investor who also supported funding during Twitter's acquisition, criticized, "Tesla's current stock price reflects the value due to the CEO's absence," pointing out that restructuring is necessary. He argued that Tesla needs a CEO succession plan and a media relations team, and that the company should communicate with investors regarding Musk's stock sales.

He also expressed his intention to join Tesla's board on the 16th. Other major investors, including billionaire Leo Kogan, Tesla's largest individual investor, criticized Musk's recent behavior of focusing solely on Twitter management and demanded a restructuring of Tesla's governance.

Bloomberg News evaluated that friendly investors who praised Musk when Tesla's stock price was soaring are now turning away as the stock price declines.

Tesla's stock price, which was trading around $400 at the beginning of the year, has plunged more than 65% (based on the closing price on this day) this year. On this day as well, major securities firms lowered their price targets for Tesla, causing the stock price to continue its relentless fall.

Tesla's stock, listed on the U.S. Nasdaq market, closed at 137.80, down 8.05% from the previous session. This is the lowest level in two years and represents a halving compared to the end of October when Musk completed the acquisition of Twitter.

This content was produced with the assistance of AI translation services.