Tesla Shocked by Musk's Twitter Fiasco

On Friday (5/1), Tesla shares plummeted after its CEO, Elon Musk, boldly claims on Twitter, "Tesla stock price is too high imo”. Oddly enough, only hours later, Tesla’s head of human resources announces that the company’s shares fell 10% in response to the tweet, closing at the unsettling level of $701.32. Although the company reported a strong quarter after their remarkable miracle run, the stock prices continued to rise up to $760.23 just before Musk’s gallant tweet. Afterwards, its stock spiraled down, reaching values of $717.64, before sinking even more. Later on, Musk declared to the Wall Street Journal in an email that he wasn’t joking and his tweets weren’t vetted before he posted them. Dan Ives, a Wedbush Securities analyst with a hold rating on Tesla, stated in an email, “We view these comments as tongue-in-cheek and it’s Elon being Elon,” and mentions that “his tweeting remains a hot-button issue.” Earlier this week, Tesla’s announcement regarding their continuous profit for three consecutive quarters was rather shocking, as the 2003-established firm has never been adequately profitable in all four quarters for a single year. According to Gene Munster, the current fiasco has caused Musk to feel frustrated, contributing to fuel his rather active Twitter account, his source of relief. Additionally, Musk recently expressed his anger over the government efforts in containing the coronavirus spread. In a recent conference call with analysts to discuss the first-quarter results, Musk lashed out at stay-at-home orders, which has induced the Fremont factory to close. Due to the shelter-at-home orders, the production of Tesla cars has been shut down at least since last month. Although the company has told some employees to prepare to return for work this week, Musk is still surrounded by uncertainty when the company will be able to restart the productions. Despite these troublesome events, Musk has recently claimed that he’s currently formulating a plan to get the Fremont factory in California back open. It is to be known that this was not the first time Musk tweeted about his company’s stock. An incorrect claim in the middle of 2018 that he was close to a buyout of Tesla led to a complaint from the US Securities and Exchange Commission. It also led to a settlement that involved Elon Musk agreeing not to issue market-moving tweets in future without first clearing them with his company’s legal department. Additionally, on Wednesday evening, Tesla shares had jumped almost 10% in after-hours trading, but closed down a little more than 2% Thursday. Subsequently, it caused Tesla’s stock (TSLA) to be labelled “overbought,” a term which traders use that looks at the average gains and losses over a fixed period, which is commonly at risk of declines. Beyond that, Tesla’s Fremont factory uncertain reopening still remains as an important issue as it might have a damaging effect on their second-quarter sales, and that uncertainty weighs heavily on investor sentiment. Once again, although Tesla’s operational results impressed, no company could maintain to be wholly immune to fallout from the pandemic.

Sources: CNBC

Bloomberg Times

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