Tesla’s painful selloff continued Tuesday, bringing a losing streak for the stock into its fifth consecutive trading day.
The shares have lost more than 16% during that span. Investors appear to be starting to fret about the dreaded D word again as CEO Elon Musk looks to wrest control of OpenAI from Sam Altman.
The D is for distraction. That isn’t the only thing investors would worry about. If he wins, investors have to think about where he will get the money to complete another multibillion-dollar purchase.
Tesla stock closed down 6.3% on Tuesday at $328.50, and fell again after market hours o.53% while the S&P 500
SPX+0.03% was flat and the Dow Jones Industrial Average DJIA+0.28% was up about 0.3%.
Tesla is now valued at less than $1.06 trillion. The company has about 3.22 billion shares outstanding, excluding Musk’s stock options. It needs the stock to stay above roughly $311 a share to maintain its trillion-dollar status.
Shares were at $251.44 on Election Day, Nov. 5, before eventually rising to almost $490 a share. CappThesis founder and market technician Frank Cappelleri says the next support for the stock is around $315.
That isn’t a fundamental call on shares, but it does offer an indication of when the selling might stop.
As for Musk, he is always doing a lot. He runs Tesla, SpaceX, xAI, and other firms. He also has a position in President Donald Trump’s administration running the newly formed Department of Government Efficiency, or DOGE.
Investors didn’t seem to mind any of that. Between the Nov. 5 election and the Jan. 20 inauguration, Tesla stock added 70%, mainly on the expectation the company would launch an AI-trained self-driving robotaxi service in 2025.
For bulls, Tesla has morphed into more than a car company. It is seen as a vertically integrated developer of AI applications. It can make cars and robots and has the software required to make them do useful things.
More recently, distraction concerns crept in as Musk’s DOGE became more active. Then on Monday, The Wall Street Journal reported that Musk was part of an unsolicited $97 billion bid for the nonprofit that controls OpenAI, the creator of ChatGPT.
“While Tesla has shifted focus to being a Physical AI play, we view Elon Musk’s bid for Open AI as a distraction from Tesla’s challenges,” wrote Oppenheimer analyst Colin Rusch in a Tuesday report.
Tesla has a lot to do this year. There are robotaxis. And the company has to accelerate growth by introducing a new lower-priced EV. Tesla car sales fell by about 1% in 2024.
no thank you but we will buy twitter for $9.74 billion if you want
— Sam Altman (@sama) February 10, 2025
“We also believe CEO Musk’s political activity has fans in certain circles, but that his public life risks alienating consumers and employees as the Trump administration tests the limits of its power,” added Rusch. He rates shares Hold and doesn’t have a price target for the stock.
As for the bid, OpenAI CEO Sam Altman tweeted “no thank you” on Wednesday, to which Musk responded, “Swindler.”
Musk has never liked how OpenAI is attempting to morph from a nonprofit into a for-profit entity.
Attempting to take over another company could send Tesla investors back to April 14, 2022 when Musk tweeted “I made an offer,” referencing his bid for Twitter. Tesla stock closed at $340.79 on April 13, the day before the bid was disclosed.
He closed the deal on Oct. 28 with Tesla stock trading at about $229, down about 33% from pre-bid levels.
Fears that Musk wasn’t focused on Tesla helped drive shares lower, but it might not be as bad as people remember. The Nasdaq Composite
COMP-0.36% lost roughly 17% over the same span. Tesla stock typically moves up or down to a greater extent than an index. A drop like that for the Nasdaq could easily produce a 25% to 35% decline in Tesla stock, all else being equal.
Maybe the market was responsible for most of the losses in Tesla stock. Investors who lived through the Twitter purchase probably don’t see it that way.
The other problem beyond distraction is that Tesla is the source of Musk’s wealth. Buying things for billions could necessitate large sales of Tesla stock. Musk sold shares to buy Twitter.
Investors don’t like it when insiders sell large blocks of stock. Few question Musk’s commitment to his car company. Still, large sales drive down prices, and no one wants to buy stock in something before the price goes down.
Where Musk’s OpenAI bid goes is anyone’s guess. Tesla investors should brace for more stock volatility. They are used to that.
Coming into Tuesday’s trading, Tesla stock was down 13% year to date, and down about 18% since the presidential inauguration. Still, shares were up about 86% over the past 12 months.
BARRONS