Tesla looks to break free from Twitter distraction wildcard
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Tesla (NASDAQ:TSLA) began to track back higher in early trading on Wednesday following a double-digit drop on Tuesday amid a shellacking in the tech sector.
Wedbush Securities Dan Ives said there are two core worries pressuring Tesla (TSLA) shares currently in regard to Elon Musk's recent acquisition of Twitter. First, Ives said the $21 billion in equity financing for Twitter will result in some piece of Musk's Tesla ownership being sold over the coming year even though a core piece of this financing is likely held as collateral and not actually sold in the transaction. "Naturally this has put a black cloud over Tesla's stock in the near-term as the Twitter financing component for Musk is now front and center for the bears," he noted.
The second worry is around the premise of Musk being distracted and pulled in too many directions at once. "This is less of a worry for us as we do not expect Musk to be CEO of Twitter but rather likely in a Chairman of the Board role with less time pressures around transforming Twitter," observed Ives.
The Twitter distraction also piles on top of the production slowdown in Shanghai, where some employees are reported to be sleeping on site, and recent negative development in India with the government pushing back on selling imported vehicles.
Shares of Tesla (TSLA) rose 0.69% premarket on Wednesday to $882.50 vs. the 52-week trading range of $546.98 to $1,243,49.
Despite the selling pressure, Tesla (TSLA) still has a market cap that is more than 8X the combined valuations of Ford and General Motors.