Tesla Investors Should Worry About Musk's Twitter Dalliance

Tesla is in a highly competitive electric car market. It has no chief operating officer. And CEO Elon Musk was already busy juggling leadership roles at SpaceX, The Boring Company, and Neuralink before he launched an unsolicited takeover offer for Twitter. That's a lot of distractions. And it may be one too many for Tesla investors, Paul R. LaMonica reported for CNN Business.

Photo Insert: Tesla's stock fell nearly 4% Thursday after CEO Elon Musk disclosed that he had made a more than $41 billion bid to buy Twitter.

Tesla's stock fell nearly 4% Thursday after Musk disclosed that he had made a more than $41 billion bid to buy Twitter. Shares of Tesla did rise a bit Monday but they are still down 6% so far in 2022.

The good news (if you want to call it that) for Tesla shareholders is that the stock is not off nearly as much as traditional automotive rivals GM, Ford, and Chrysler owner Stellantis. Shares of Detroit's Big Three have each plunged more than 20% this year.

Tesla, to its credit, has managed to thrive in spite of the often circus-like atmosphere surrounding Musk. Tesla is expected to report an earnings-per-share increase of nearly 145% from a year ago when it releases first quarter results on Wednesday.

Analysts are forecasting a more than 70% jump in sales thanks to strong global demand for the company's Model S, X, 3, and Y vehicles.

"Elon Musk's offer to buy Twitter is the latest development in a weeks-long saga that is simply a distraction from the many challenges facing Tesla itself," said David Trainer, CEO of New Constructs, an investment research firm, in an email.

"Elon Musk should focus on Tesla and not waste time attempting to acquire and manage (Twitter)," Trainer added.

There's also the growing threat from newer EV rivals like Rivian and Lucid in the United States as well as Nio, Xpeng, and Li Auto in China. With competition around the globe increasing, one would think that Musk would want to prioritize Tesla instead of tilting at the social media windmill that is Twitter.

Musk's perhaps quixotic attempt to take over Twitter and mold it into what he claims would be a platform that better supports free speech could also make some prominent companies reluctant to spend money on a Musk-led Twitter.

"As Musk has displayed his thirst to change Twitter mainly with regard to content moderation, some large brands may become hesitant to place ads next to what they consider may be more questionable content," said Morningstar's Ali Mogharabi in a report.

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