After recent sell-offs, the EV stock is now down roughly 21% year to date.
What happened
Shares of Tesla (TSLA -0.45%) are losing ground in Thursday’s trading session. The electric vehicle leader’s stock was down roughly 6% at 10:15 a.m. today. Meanwhile, the Nasdaq Composite index was up roughly 0.3%.
The sell-offs appear to be connected to CEO Elon Musk’s recently accepted bid to purchase Twitter for $44 billion. In addition to worries that Musk will sell a significant amount of Tesla stock in order to fund his acquisition of the social media company, shareholders have other concerns related to the move.
So what
Investors appear to be worried that getting involved with Twitter will distract from Musk’s ability to run Tesla and continue steering the company to growth. In addition to the EV company, Musk is also already the CEO of space exploration and industry company SpaceX. It’s also possible that another recent Twitter-related happening is having some impact on today’s sell-off.
While it’s clear that Musk’s comment about adding the long-since-removed controlled substance back into the recipe of Coca-Cola‘s namesake drink was facetious, some investors may be viewing the comment as overly flippant and indicative of a lack of seriousness on the CEO’s part.
Now whatw
Tesla has been posting rapid sales growth and delivering margins that are best in class among automotive companies, but questions remain about whether the company will be able to continue innovating and delivering new products and services that can help justify its current growth-dependent valuation. After recent sell-offs, the company now has a market capitalization of roughly $864 billion and is priced at approximately 10 times this year’s expected sales and 68 times expected adjusted earnings.
