Wall Street is surprisingly sanguine about how Elon Musk’s ownership of Twitter might affect Tesla,
Analysts and investors even see a few ways it might help the company.
Tesla stock (ticker: TSLA) dropped shortly after Twitter (TWTR) said Monday it accepted the Tesla CEO’s $44 billion buyout offer. Investors might have been worried about the remote possibility Musk would sell stock to finance his purchase.
That possibility doesn’t seem remote to traders Tuesday. It appears dominant. Tesla stock was down 10.5% in late Tuesday trading, at about $893. Twitter stock was down 2.9%, at about $50, and the S&P 500 and Dow Jones Industrial Average were down 1.8% and 1.6%, respectively.
Still, Musk has the money. Another potential reason Tesla is down by double digits is the distraction factor. Musk might have too much on his plate with fixing Twitter while he also runs Tesla, SpaceX, the Boring Co., and Neuralink,
But when Barron’s asked a handful of analysts and investors about the issue of distraction on Monday evening, no one was that concerned. Musk buying Twitter was called a distraction “at worst”; most people we contacted pointed out that Musk has a long history of successfully juggling multiple projects.
The Tuesday trading action is one sign that the view that Twitter is good for Tesla might be a touch too optimistic. It will probably take some time for a majority of investors to become convinced that Twitter’s entrance into the Muskonomy is good for his car company.
Here are a couple of the more positive takes.
First, there is Tesla’s relationship with the media. Tesla is famous, or infamous, for its lack of advertising and public-relations efforts. The lack of either can’t really be said to have hurt the company or its stock. Tesla is the most valuable car company on earth by a huge margin. Its brand as an electric-vehicle maker is so strong that the company saw an order increase after the recent Super Bowl, where other car makers were advertising their EVs heavily.
Still, Tesla could spend some time talking more about vehicle safety or anything else it might believe can help its brand. It is possible that Musk’s ownership of Twitter could facilitate that.
And longer term, less of Musk could be a good thing for Tesla. That isn’t because Musk is a problem, but because one day, Tesla will need to learn to live without him—or with less of him. Musk doing other things could help speed the emergence of other executives who could take larger roles at the company down the road.
Write to Al Root at [email protected]
Credit: www.marketwatch.com /