Tesla Stock Hit With Twitter Jitters. Fundamentals Aren’t Helping.

Keeping up with the comings and goings at Twitter can feel like a full-time job, but Tesla TSLA –1.23%  investors need to try to at least keep tabs on what could affect the car company. Their CEO runs Twitter too.

Investors should probably keep on up automotive fundamentals, too.

Following fundamentals isn’t as easy as investors might expect, however. There is a lot of Twitter stuff to sift through. Elon Musk’s Twitter feed now feels like a live stream of strategy meetings. Financials, management, and advertising are all discussed openly, but not all of that has the potential to affect Tesla (ticker: TSLA).

Early in his tenure as Twitter CEO, Musk lamented the loss of advertising revenue as some big brands paused spending shortly after he took over, calling it “messed up.” Twitter has found at least one new advertiser recently. Monday morning, Musk confirmed that his rocket company, SpaceX, was now advertising Starlink, its space-based high-speed internet service on the social media platform.

 

 

That raises the possibility of conflicts of interest, but nothing prevents cross promotion among Musk’s companies. The issue for Tesla investors is whether Musk’s car company will start spending money on advertising.

Tesla has never spent on traditional ads, as other car companies do, relying instead on Musk’s personal brand and word of mouth. Advertising to help build Tesla’s brand would mean dollars moving from operating profit into operating expenses. Advertising dollars are supposed to earn a return for any company, but the effect of ad spending isn’t something Tesla investors have had to consider.

SpaceX’s move to try advertising shows that Musk is willing to spend, even if only on a trial basis. SpaceX didn’t return a request for comment about how much it plans to spend.

 

He’s following Twitter news too, even referring to Tesla as “T(w)esla” these days. “Tesla’s stock performance has now, unfortunately, become loosely tied to news about Twitter’s economic prospects,” wrote the analyst. “For now, we view this as short-term noise and, over the medium to long term, see Tesla’s stock tied to Tesla’s earnings.”

Tesla investors can hope.

For now investors are nervous about the whole Twitter-Tesla-Musk situation. Coming into Monday trading, Tesla stock is down about 13% since Musk completed his purchase of the social media company. The Nasdaq CompositeCOMP –0.25%  gained about 5% over the same span.

Nothing that happened over the weekend has seemed to change that. Tesla stock is down 2.6% in early trading Monday at about $191 a share. The S&P 500SPX +0.12%  and Nasdaq Composite are off about 0.1% and 0.5%, respectively.

Write to Al Root at allen.root@dowjones.com

 


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