TSLA -4.73 percent shares plummeted 4.3 percent Tuesday as the company’s deliveries missed expectations over the weekend, prompting investors to sell the stock. Tesla (NASDAQ: TSLA) is the world’s largest maker of electric vehicles (EVs). Whether the sell-off was caused by Tesla delivering 7,000 less vehicles in the first quarter than the company had predicted is difficult to determine — especially considering that the stock actually rose on Monday, the first trading day after the news surfaced.
The drop in the stock market on Tuesday might be caused by two very distinct factors.
To begin, you are surely aware that Tesla’s Chinese competitor Nio (NIO -5.79 percent ) has developed a creative solution to the problem of “range anxiety” in electric vehicles. Whenever the batteries in a Nio get low, you can either pull up to a charging station, plug them in, and let them recharge for a while — or you can visit a dedicated Nio service station and have them quickly switched out for a new set of fully charged batteries.
Tesla owners are unable to do so. That may even be impossible for them to do, given how tightly Tesla is integrating its batteries into its vehicles on an ongoing basis. They’re effectively a component of the vehicle’s structure, rather than simply a pack carried within it.
Unlike Tesla, Nio stated on Tuesday that it is taking its brilliant concept and monetizing it even further by offering to licence its battery swap technology to other electric vehicle manufacturers. Nio is the first company to do so. Tesla’s prospects would deteriorate if Nio’s approach became widely accepted and adopted as the standard in the automobile industry. And it might be one of the reasons why the stock is declining on Tuesday.
Factor number two: The news that Elon Musk has purchased a 9.1 percent stake in Twitter is… one of the likely reasons why Tesla’s stock was climbing on Monday in the first place — the news that Elon Musk has purchased a 9.1 percent interest in Twitter ( TWTR 2.02 percent ).
The announcement of Musk’s large investment in Twitter drove the stock price of the social media firm soaring on Monday, and it is continuing to increase on Tuesday when it was revealed that his ownership in the company comes with a seat on the company’s board of directors.
Although fantastic news for Twitter, it may not be so good news for Tesla in the long run. Despite the fact that Twitter users appear to be excited about Musk’s arrival, it is possible that he will use his power to help clean up Twitter and urge the firm to make improvements that would improve the platform’s functioning. The possibility that Musk may spend too much time on Twitter may cause Tesla investors to be concerned that he will be distracted from his core responsibility of keeping the EV firm on track.
Granted, Musk has demonstrated his ability to wear numerous hats in the past (as CEO of Tesla, SpaceX, SolarCity, The Boring Company, and other companies), with no negative consequences for Tesla shareholders. However, the bigger the number of hats he wears, the greater the likelihood that something will go wrong.
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Tesla’s Ready to Split Again
Tesla is no stranger to stock splits, having done it on several occasions. In reality, the most recent stock split for the corporation occurred on August 31, 2020. The stock price of the corporation fell from $2,200 to around $450 as a result of this. The value of Tesla shares has more than quadrupled since the business implemented its 5-for-1 stock split over two years ago, according to the company’s financial statements. The electric vehicle manufacturer even got it into the trillion-dollar club, joining other well-known Nasdaq peers in the process.
Before you go out and buy additional Tesla stock — or your very first share — you should be aware that a stock split does not ensure that the company’s stock price will rise as a result of the split. It’s more of a rebranding exercise for the corporation. Nothing changes in terms of how much money is invested in the stock.
The only reason the shares appear different is because they have been split into smaller parts. Anyone may speculate about what a prospective stock split might look like at this point, so you shouldn’t spend all of your time worrying about something that isn’t officially announced.