Tesla stock fell as much as 11% on Tuesday as investors digest Elon Musk’s $44 billion acquisition of Twitter and increased electric-vehicle competition from Ford.
The decline came amid a broader sell-off in the stock market, with the Nasdaq 100 falling more than 3% as investors prepare for first-quarter earnings from mega-cap tech companies like Microsoft and Apple.
Musk’s purchase of Twitter likely means at least some of his attention will shift away from Tesla and towards improving the social media platform that he himself is an avid user of. Whether that attention shift will have any material impact on Tesla remains to be seen, but it’s nothing new for Musk given his other ventures.
He has been CEO of Tesla since 2008, but is also the founder and CEO of SpaceX and has material interests in The Boring Company and Neuralink, two early-stage startups tackling hyperloop transportation and brain-machine interface technologies, respectively.
Given Musk’s success in managing a number of different ventures at the same time, investors will likely give him the benefit of the doubt about his time management skills and that he can juggle another venture while running Tesla.
But perhaps more concerning for Tesla investors is how Musk is funding his purchase of Twitter. Specifically, he has put up tens of billions of dollars worth of his Tesla stock as collateral to fund the acquisition.
In the event that Tesla’s stock price falls significantly, Musk may be forced to sell shares or put more of his Tesla stake up as collateral to avoid a margin call. That could put further downward pressure on Tesla’s stock price if he is forced to sell.
And while investors digest Musk’s buyout of Twitter, Tesla is also facing increased competition in the EV space. Ford said that it is experiencing strong demand for its F-150 Lightning pickup truck, and that it expects to produce 150,000 units of the electric truck in 2023. Ford officially launched production of the pickup on Tuesday.
“We think this is as big a product as when the Model T came out for us,” Ford CEO Jim Farley told CNBC’s Jim Cramer on Monday. Ford has the chance to become the first automaker to execute and scale its production of an EV pickup truck. It’s a big deal considering pickup trucks are consistently the best selling car in America.
If successful, Ford will have effectively beaten Tesla to the punch in the EV pickup space, as Tesla once again delayed the launch of its Cybertruck to 2023 at the earliest. And how long it takes for Tesla to scale up the production of its Cybertruck remains an unknown.
