Even with all the good news it received last week, Tesla (NASDAQ:TSLA) stock isn’t off to a good start today. The electric vehicle (EV) producer has seen shares fall since a tweet from Elon Musk yesterday put investors on edge. Still, while TSLA stock may be in the red, things are looking much better for crypto investors. Musk stated that he is not planning on selling his crypto holdings. That put Bitcoin (BTC-USD) and Ethereum (ETH-USD) in the green this morning, although prices have been fluctuating since.
Since markets opened today, TSLA stock has been turbulent, slipping more than 4% so far. It’s not hard to see why. Yesterday, Elon Musk confirmed something that many investors had been fearing; both Tesla and SpaceX are dealing with the same inflationary trends pushing down many of their smaller peers.
Tesla & SpaceX are seeing significant recent inflation pressure in raw materials & logistics
— Elon Musk (@elonmusk) March 14, 2022
It makes sense that such a direct admission of problems could make investors nervous. However, it’s also well-known that inflation pressure has been constraining many companies. Musk even cited an article from the Financial Times on the recent steep spikes in commodity prices. On the Q4 earnings call, the CEO also noted that Tesla was not immune to supply-chain constraints.
What’s Happening with TSLA Stock
If investors were expecting these inflationary trends, though, they shouldn’t be deterred from TSLA stock. The company has seen a difficult year so far, but it continues to outperform many EV peers like Rivian (NASDAQ:RIVN) and Lucid (NASDAQ:LCID). This is likely due to Tesla’s size advantage and ability to secure partnerships with companies providing the components it needs.
Today, however, investors should really be more focused on Musk’s bullish crypto stance. Often hailed as the “Dogefather,” the CEO turned many heads in October 2021 when he admitted via Twitter (NYSE:TWTR) that he had acquired Bitcoin, Ethereum and Dogecoin (DOGE-USD). All three names shot up in response.
It’s no secret that crypto markets have been volatile lately, but the market’s most powerful influencer still believes in them. That should be reassuring for any investors recently swayed to skepticism by talk of a “crypto crash.” Despite advising investors not to “bet the farm” on crypto back in October, Musk clearly thinks the markets will rebound. And that isn’t just good news for his personal portfolio. At the end of 2021, Tesla held nearly $2 billon in Bitcoin.
What It Means
Many financial markets are struggling right now, but we know that momentum is quick to spread. If Musk hadn’t tweeted about inflationary pressures, the momentum he created for crypto might have driven TSLA stock up today. But we could still see that happen in the future if investors shift focus to other aspects of Tesla. For example, the company is scheduled to begin deliveries from its Berlin Gigafactory before the end of the month. That will likely help push up shares.
If Elon Musk believes strongly in crypto, other investors will too. What’s more, that enthusiasm could easily carry over to TSLA stock. As such, investors should hold out on both the EV stock and the aforementioned cryptos.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
