Why Tesla Stock Braked Hard Today

what happened

Fresh off of a “deliveries miss” over the weekend, shares of electric vehicle (EV) leader You’re here (TSLA -4.17% ) fell Tuesday, trading down by 4.3% as of 12:20 pm ET. It’s hard to say, though, whether that sell-off was related to Tesla delivering 7,000 fewer vehicles in the first quarter than it had forecast — especially given that the stock actually went up Monday, the first trading day after that news broke.

Tuesday’s dip actually could be driven by two entirely different things.

Image source: Getty Images.

So what

Thing 1: You’re probably aware that Tesla’s Chinese rival Nio ( NI -3.52% ) has a novel solution to the problem of electric car “range anxiety.” When the batteries run low in a Nio, you can pull up to a charging station, plug in, and spend some time recharging them — or you can visit a special Nio service station and have them rapidly swapped out for a set of fully charged batteries.

Tesla owners can’t do that. In fact, it’s possible they’ll never be able to do that, seeing as Tesla is integrating its batteries ever-more fully into its vehicles. They’re essentially part of the car’s chassis — not just a pack carried within it.

Nio, on the other hand, announced on Tuesday that it’s taking its great idea and monetizing it further by offering to license its battery swap technology to other electric car makers. If Nio’s way catches on and becomes the standard in the auto industry, that would not be great news for Tesla. And that could help explain why the stock is down Tuesday.

Thing 2: The second reason Tesla may be falling is … one of the possible reasons the stock was rising Monday — the news that Elon Musk has taken a 9% stake in Twitter ( TWTR -0.41% ).

Now what

News of Musk’s big investment sent Twitter’s stock price exploding higher on Monday, and it’s continuing to rise on Tuesday’s news that his stake in the social media company comes with a board seat.

But what’s good news for Twitter may not be such great news for Tesla. While Twitter users are apparently enthusiastic that Musk has arrived and may use his influence to help clean up Twitter and press the company to make changes that improve the platform’s functionality …

… Tesla investors may worry that Musk might spend too much time focused on Twitter, which would distract him from his primary job keeping the EV company on track. Granted, Musk has proven adept at wearing multiple hats in the past (leading Tesla, SpaceX, SolarCity, The Boring Company, and so on) to no ill effect for Tesla shareholders. But the more hats he piles up, the greater the risk that something will slip.

Seems to me like that’s another good reason for Tesla investors to feel nervous.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Leave a Reply