This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
What happened
Tesla (NASDAQ: TSLA) shares have now plunged more than 20% in less than 20 days. There are several reasons for that, but a new catalyst now has the drop gaining momentum. Today, as of 10:34 a.m. ET, the stock was trading at its morning lows down 5.4%.
So what
Today’s move lower was sparked by the news that Tesla CEO Elon Musk has reversed course and now intends to follow through with his bid to purchase Twitter for his original offer price of $54.20 per share. Musk has been fighting in court to back out of the deal, but now intends to spend the full $44 billion he originally offered. That’s likely the part that has Tesla shareholders on edge today. But it shouldn’t be the only point of concern.
Now what
Musk already sold about $20 billion in Tesla stock over a six-month period beginning late last year. He sold an additional $7 billion in August as the fate of his fight to back out of the deal remained uncertain, and he might be forced to pay the full amount. Now he has agreed to that, and Wedbush analyst Dan Ives thinks he might sell another $2 billion or $3 billion of Tesla stock, according to Barron’s.
But that’s not the sole concern for Tesla shareholders. In taking over Twitter, Musk has to now lead a company he himself damaged with repeated claims of fake accounts and incorrect reporting metrics. Now he’ll have deal with repercussions that could include lost advertising and other income streams. Investors are right to wonder whether that could take his focus away from Tesla at a time when the company is ramping up two new factories and fending off an influx of new competition.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
The post Why Tesla shares dropped Wednesday appeared first on The Motley Fool Australia.
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More reading
- Why Twitter stock skyrocketed today
- Tesla just missed delivery estimates. Here’s why it’s time to buy
- Why Tesla stock slammed on the brakes Monday
- 3 high-growth US stocks that could be worth $1 trillion in 10 years – or sooner
- Why Tesla shares tanked today
Howard Smith 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 Scott Phillips.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
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