If an employee applied to work for my business and one of their "concerns" was how our company would appear on their resume (in contrast to another), I would similarly discard their application.
The mistake wasn't the hiring decision, clearly it was getting into an argument with a prospective employee in a public internet posting.
That shows a serious lack of judgement and poor leadership.
And moreover this isn't a photo sharing business he's running, when you're asking people to trust you with their income and their medical coverage you are going to be held to a higher standard.
Yes. Getting into acrimonious debate with a prospective junior hire about their future career prospects is almost the definition of a misplaced sense of priority.
It's a not a good sign when your CEO argues with a "junior hire", however if he's successful at growing the company and creating value, it will be painted as part of his winning formula.