Tesla Stock Slips Below US$200 As Musk Focuses On Twitter
Tesla stock has dropped dramatically in response to Musk’s shift in focus.
Tesla is responsible for spearheading the electric vehicle movement. They essentially took the biggest risks and made the most dramatic moves in order to create a new type of vehicle offering. Today, just about every brand, including Perodua, has an electrified offering on the table. Most brands already have a vision to go fully-electric with many even cutting off further investment in internal combustion engine technology.
But Tesla’s journey is far from over. Today, it faces stiff competition and new production challenges. Amidst these worries, CEO Elon Musk has very publicly shifted most of his attention to his new social media acquisition. Elon Musk even famously sold some of this Tesla stock in order to complete the purchase of Twitter.
Responding to fears that the entrepreneur might be losing focus on the electric carmaker, investors this week began to sell Tesla stock driving the price down to late 2020 levels. As a result, Elon Musk’s net worth dropped below US$200 billion as a big share of his wealth is tied to 15% stake in Tesla.
Tesla’s stock value has been greatly influenced by Musk’s focus on Twitter this year, according to research by Reuters. Back in April, when Elon Musk first expressed interest to purchase Twitter, Tesla stock hovered below US$350 per share. The moment Twitter accepted Musks’ advances, the stock plummeted below US$300 per share. By May 2022, it was just above US$200 per share as talks dragged on.
Musk then reversed his decision in late June 2022, and Tesla stock climbed back up above US$300 per share. For an extended length of time, the stock remained stable. Suddenly in September 2022, Musk started to talk about buying Twitter once again and Tesla stock took another major tumble. By late October, when the deal was finalised, Tesla stock fell below US$200.
To purchase Twitter, Elon Musk had to divest at least US$15 billion worth of Tesla stock, borrow US$13 billion and make a US$33.5 billion equity commitment.
What does this mean for Tesla? I’m not sure. I don’t think Elon Musk is bored of the auto business just yet. Tesla should have enough talent to keep the organisation running for now. Investors are probably just looking to punish him for taking his eyes off the ball, but there’s nothing that really indicates a continued downward spiral for Tesla stock… At least for now. If Musk continues to pour his attention on Twitter during a Tesla-related crisis, then there might be a problem.
About the Author
Subhash Nair Written work on dsf.my. @subhashtag on instagram. Autophiles Malaysia on Youtube.
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