Tesla cars parked in a lot at a Tesla factory.
Justin Sullivan/Getty Images
Tesla shares opened higher Thursday, then promptly fell. It isn’t easy to find anything new spooking investors.
Shares traded as high as $900 shortly after the open, but are now down 5.6% at just below $833 a share. The S&P 500 and Nasdaq Composite Index are up 0.5% and 0.3%, respectively.
There are no shortage of suspects to blame the drop on. There is Twitter (ticker: TWTR), Ford Motor (F), Elon Musk, China, and Wall Street, among other things, that can move Tesla (TSLA) shares up and down.
Twitter, which Musk is buying for $54.20 a share, reported first-quarter numbers. Adjusting for a bunch of charges, earnings look mediocre. Sales of $1.2 billion missed analyst forecasts.
What that has to do with Tesla, however, isn’t clear. Tesla investors are worried that Musk will sell some Tesla stock to fund the purchase. Large blocks of stock on sale can push down share prices. But Twitter results don’t really change that calculus. There really isn’t a reason weak Twitter results change anything about Musk’s financing options.
Barron’s suggested a kind of backwards-merger-arb calculation to track Twitter risk in Tesla stock. It’s a little like a conspiracy theory on a pushpin board, but the calculation might be useful.
Since Musk’s bid was accepted, Tesla stock is down about 11% more than it should be based on the 3% decline of the Nasdaq over the same span. That’s indicates there is up to $110 in Tesla shares for Twitter-related risks. Wednesday that calculation yielded $37.
Practically speaking, what the calculation means is that the market believes the odds are up that Musk will buy Twitter with Tesla stock.
Musk, for his part, hasn’t said anything about stock sales. There are no filings or tweets of significance on Thursday either.
Ford stock is down 5.1% after it reported first-quarter numbers Wednesday evening. Ford beat earnings by a little, but Wall Street isn’t sure price increases will keep pace with cost increases. That worry might be spilling into Tesla stock.
China remains a watch item for investors. The pace of production at the Tesla facility in Shanghai, which was shut for weeks because of Covid restrictions, will impact second-quarter deliveries and earnings. Investors probably don’t want to deal with that volatility.
Whatever the reasons, Tesla investors are reeling. Shares are down more than 20% so far in the month of April.
Write to Al Root at [email protected]
