Why Is Tesla (TSLA) Stock Down Today?
It has been over a week since Elon Musk took control of Twitter and things aren’t going well. The CEO hasn’t held back on his plans to layoff most of the company’s workforce, generating plenty of controversy. But things aren’t going well for Tesla (NASDAQ:TSLA) and TSLA stock, either.
Tesla has been struggling ever since Musk shifted his focus to Twitter. Since the finalization of the deal, shares have been on a steady downward trajectory. As of this writing, the stock is down more than 4% for the day with no rebound in sight.
Plenty of experts predicted this exact scenario leading up to the Twitter acquisition. As InvestorPlace reported during Musk’s first attempt to acquire the platform, many financial and legal sources agreed that, if the CEO successfully closed the deal, TSLA stock would sink. Now, shares are falling and all eyes are on Musk as he scrambles to turn the newly private Twitter into the profitable business he promised it could be.
Let’s take a closer look at why Tesla is down today — and what it means for the future of the company.
The Twitter Takeover Is Pushing TSLA Stock Down
As TSLA stock has plunged downward, more and more experts have expressed concern for the electric vehicle (EV) company. Per a Barron’s report:
‘[Twitter] is far from profitable, and Musk loaded it up with debt to make the acquisition. Finding a way to cut costs while generating new revenue from the largest tech leveraged buyout ever is a challenge that will test his problem-solving skills and pull his attention away from Tesla.”
It’s quite reasonable for investors to be concerned about Tesla right now. For one, Musk has been the clear face of Tesla since even before the company made its trading debut. Now that he is clearly focused elsewhere, some investors may be inclined to jump ship before TSLA stock falls further. After all, it’s hard to feel confident in a company as its founder and CEO makes a mess of a different venture. Today has even brought reports that some of the Twitter layoffs were premature; the company is now asking some ex-employees to return.
On top of that news, Musk is also preparing to defend his $56 billion pay package from Tesla against claims that the package has unjustly benefited him. The trial will begin on Nov. 14.
The acquisition of Twitter was largely financed with TSLA stock. If the CEO loses this most recent case, it will likely create more turbulence for both companies.
None of this looks good for TSLA. The company is facing an uncertain future. And Wall Street hates uncertainty.
The Road Ahead
Whatever way you look at it, Tesla is poised to end 2022 on a bad note. Elon Musk will remain highly distracted for at least the next few weeks. Recently, the company also reported that it’s long-awaited Cybertruck won’t be hitting the road until 2024. Tesla has missed production deadlines before, but investors could really use some good news right now. This additional bad news will make it even harder for TSLA stock to rally amid an already volatile market.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.