1. Analysis
June 22, 2022updated 24 Jun 2022 3:18pm

“Elon Musk’s cult of personality seems to be wearing off” – analysts

The bad news could only be starting for Elon Musk after a SpaceX rebellion sparked questions about his ESG chops

By Eric Johansson

Tesla CEO Elon Musk has accumulated a devoted following on his march to becoming the richest man in the world. However, the cult of personality around the SpaceX CEO and prospective Twitter owner is wearing off, according to analysts.

The Musk cult of personality took a thumping last week on the back of SpaceX firing five employees. The sacked staff had circulated an open letter criticising the CEO and the company’s workplace culture.

The letter urged SpaceX executives to make the company culture more inclusive. SpaceX responded by firing the employees involved. SpaceX president Gwynne Shotwell emailed employees saying the ex-employees were fired for making staff feel uncomfortable, intimidated and bullied. She also claimed staff members felt angry because the letter pressured them to sign onto something that did not reflect their views. Market watchers now believe this is another sign that the cult around Musk is waning.

”The novelty of Elon Musk’s cult of personality seems to be wearing off, and this is just the latest saga in a string of recent controversies for him,” Amrit Dhami, associate analyst at research firm GlobalData, said in a new podcast. “Musk has pitched himself as a champion of free speech, but SpaceX’s firings are rapidly dismantling any credibility around that claim. If SpaceX continues to disregard the ‘social’ component of ESG, the negative publicity could permanently damage its brand.”

Indeed, the SpaceX employees’ letter is only the latest in a growing parade of setbacks for the PayPal co-founder. Musk has faced wide-ranging criticism for his laissez faire attitude to free speech in connection with his proposed purchase of social media giant Twitter. A plethora of commentators feared the self-proclaimed free speech absolutist buying the platform would see the return of ousted conspiracists and the likes of Donald Trump, who had previously been kicked off Twitter.

Musk watchers also have cause for concern when it comes to the Tesla founder’s own online missives. In the past, his social media posts have sent the value of cryptocurrencies like bitcoin and dogecoin to soaring new heights and to deep lows. The SpaceX founder’s tweet referring to a British caver involved in saving Thai schoolboys as “pedo guy” forced Musk to fight back and win a defamation lawsuit.

Then, of course, there’s that time he used his online presence to suggest he’d take Tesla private at $420 – a reference to the weed-smoking culture. The stunt landed him an US Securities and Exchange Commission investigation and a $40m settlement.

Musk cult ain’t the only powerbase to be faltering

The SpaceX rebellion highlights a growing employee backlash against tech companies’ old models. Amazon and Apple are just two of the tech titans of Silicon Valley that have seen its staff unionise over the past year. Elsewhere, gig economy companies like Uber and Deliveroo are fighting tooth and nail against recognising their drivers as employees and self-employed contractors. Taking that macro perspective into account, the SpaceX uprising shouldn’t shock anyone.

“It was certainly a bold move to openly criticise the behaviour of their employer, who is also the richest man in the world, but it’s not very surprising when we look at the wider no-nonsense spirit of the US workforce,” Dhami says. “Pandemic-led layoffs and wage cuts are still being felt, and living costs are soaring. Tech titan Amazon also came under pressure from its employees this year and was forced to recognise the newly-formed Amazon Labor Union. Workers aren’t intimidated by the size of their employer’s shadow and the SpaceX firing could now lead to further unrest among the company’s employees – a dangerous prospect given the importance of retaining tech-savvy experts and weathering the Great Resignation.”

The cult of Musk losing power also underlines potential risks for SpaceX’s mission as a whole, according to analysts.

“Musk has presented his mission for humans to become a spacefaring civilization as the future, citing this as a type of planetary insurance policy should environmental change go from bad to worse,” Francesca Gregory, associate analyst at GlobalData, said in the podcast. “However, the notion that SpaceX’s activities are a force for good clearly jars with its handling of criticism within its workforce. The firings will do nothing to help its ESG credentials, with multiple allegations of sexual harassment from former SpaceX employees also being lodged at the company’s CEO, Elon Musk in recent months.

“SpaceX’s status as a private company will go some way to insulate the company from backlash. However, news that the company fired employees for criticizing Musk and SpaceX’s work culture will raise serious questions about the company’s ability to reconcile all aspects of [ESG] with its ongoing quest for Mars. This comes at a particularly bad time as earlier this month, the FAA ruled that SpaceX must undertake 75 mitigating actions spanning all three ESG pillars to get its Starship off the ground. The latest firings, combined with Musk dubbing ESG a ‘scam’ in the past, casts doubt on whether the company’s governance will prove a sticking point for its aspirations SpaceX’s quest to Mars feels very distant, but neglecting ESG issues at home will undoubtedly bring SpaceX’s aspirations crashing down to Earth”

GlobalData is the parent company of Verdict and its sister publications.