Why Has Tesla Stock Dipped Today?

Elon Musk’s bold offer to purchase Twitter has sent shockwaves through his existing company, but should you be thinking about selling?

Shares in electric-vehicle giant Tesla (NASDAQ: TSLA) have dipped by over 3% following a wave of uncertainty surrounding the company. The culprit? It won’t take a genius to figure out that the blame — once again — lies squarely at the feet of its eccentric billionaire CEO, Elon Musk.

Let’s find out why.

How did Elon Musk cause Tesla shares to fall?

Unless you’ve been on a self-imposed internet hiatus, the news that Elon Musk has offered to buy social media platform Twitter (NYSE: TWTR) outright should come as no surprise. Musk offered to purchase the firm at a price of $54.20 per share — valuing Twitter at around $43 billion. This represents a premium of 18% on the firm’s stock price Wednesday night, and a 38% premium on its stock price prior to Musk’s recent 9.2% stake being announced.

But why is this impacting Tesla?

The most obvious reason is that investors are worried about Musk’s focus being divided once again. While he has shown the capacity to juggle multiple businesses previously, taking Twitter private right now could wreak havoc on Tesla’s current scaling of production at its factories in Austin and Berlin. Elon already seems to spend quite a bit of time ruminating over his daily tweets — or at least he takes time to type them out — so inheriting a new plaything could easily distract him at a critical time for Tesla in a trying year.

A second reason for some bearish sentiment is concerns over the financing of the Twitter deal. Musk’s most liquid assets appear to be his $170 billion worth of Tesla stock. A wholesale sell-off by the CEO and founder could spark wider cash-outs.

So, should I sell my Tesla stock?

I can’t tell you whether or not it’s time to sell or not. What I can do, however, is remind you that one of the keys to building wealth is a long-term buy and hold strategy. This is far from the first time Elon Musk has used Twitter to cause rumblings with Tesla’s stock — although it’s certainly a different tactic to his usual antics.

If you were to sell every time Tesla’s stock took a small dip because of something Elon did, you’d have lost out on a whole host of gains over the last number of years. Nothing has changed fundamentally with the auto company, so your outlook shouldn’t change either.

Should the deal for Twitter go through, there’s a chance that could change. But, until then, you’re better off holding tight and waiting to see how the story unfolds. I’d be willing to bet there are a few chapters yet to be written.