Why Tesla stock is bouncing back today

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

red tesla on the road

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

After a massive 12% sell-off Tuesday, shares of leading electric vehicle maker Tesla (NASDAQ: TSLA) were slightly rebounding Wednesday morning. Tuesday’s crash came as investors processed the news that the board of Twitter (NYSE: TWTR) had agreed to sell the social media company to Tesla CEO Elon Musk for $44 billion.

That news rattled Tesla investors initially, but they appear to be regaining some of their optimism about the EV stock again. As of noon ET, Tesla shares were up by about 2.7%.

So what 

Some investors appear to be concerned that Musk — who also leads the space exploration company SpaceX and is deeply involved in other start-ups — could divert too much of his attention away from Tesla and toward Twitter. 

They are also likely concerned about the way the EV company’s stock will be tangled up with the Twitter deal: Musk will put up tens of billions of dollars worth of Tesla shares as collateral for the loan he’s taking out to partially finance the purchase. Wedbush analyst Daniel Ives highlighted this issue in an investor note Wednesday, and said that the Twitter transaction “was never ideal” for Tesla investors. 

Given all that, it’s possible that bargain-hunting investors picking up shares on the dip are driving Tesla’s moderate share price rise Wednesday. 

Now what 

While it’s not surprising that some traders have been concerned about what Musk’s Twitter purchase will mean for Tesla, I think investors are right to be ignoring some of the harshest takes on the stock right now. 

Musk is clearly committed to the EV company, and even as he’s put time into launching and managing other businesses, Tesla has still grown at a rapid pace. While it’s likely that Musk will assert considerable influence over Twitter, he’s also said that he won’t join the social media company’s board. 

All of which means that investors probably shouldn’t be too concerned that too much of Musk’s attention will be taken away from Tesla. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla stock is bouncing back today appeared first on The Motley Fool Australia.

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More reading

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla and Twitter. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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