TSLA Stock Will Be the Winner of Musk’s Twitter Deal Termination

  • Elon Musk has confirmed he no longer plans to buy Twitter (TWTR).
  • For Tesla (TSLA)  investors, this is excellent news.
  • Musk will be able to fully focus on the electric vehicle (EV) leader.
"TSLA stock" - TSLA Stock Will Be the Winner of Musk’s Twitter Deal Termination

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Elon Musk’s negotiations to acquire Twitter (NYSE:TWTR) have reached a tentative end. On July 8, the Tesla (NASDAQ:TSLA) CEO confirmed that he planned on terminating his agreement with the social media giant. While Twitter has made it clear that it intends to challenge Musk’s attempts to void the deal, it seems that the acquisition will not be going through. TSLA stock is down today, but this development should help boost shares in the long term.

What’s Happening With TSLA Stock

Both TWTR and TSLA stock have been falling all day. As of this writing, TSLA is down 6% for the day, though its current pattern hints at a rebound. TWTR’s performance has been worse. The stock has been slowly declining all day. As of this writing, it is down more than 10% and shows no signs of rallying.

It is not unexpected that TWTR is down following this news. Musk has called considerable attention to the platform’s bot count through his negotiations. But while Twitter’s future remains uncertain, the deal’s termination is likely to boost TSLA stock. Let’s take a closer look at the reasons why.

Why It Matters

It’s no secret that Tesla shareholders weren’t happy when Musk announced his plans to acquire Twitter. There were multiple reasons why TSLA stock didn’t react well to the news. The X Holding Company that Musk planned on launching sounded like exactly the type of conglomerate that Wall Street doesn’t like. But more importantly, Musk taking over a different company in a different sector stood to compromise his leadership of Tesla. Experts agreed that if he were to acquire Twitter, it would sink TSLA stock.

Now that Musk appears to have abandoned his mission of taking over the social media platform, he can refocus his efforts on Tesla. At a time when supply-chain and labor constraints are forcing Tesla to pause production across multiple factories, the electric vehicle (EV) leader can’t afford any more setbacks. Musk turning his attention back to it could be exactly what the company needs to start growing again. Even the recent sales bump from China still has some experts worried. Tesla’s recent Q2 deliveries didn’t thrill many investors, but as analyst Dan Ives of Wedbush notes, much of Wall Street is focused on the coming quarter.

What It Means

There has never been a more opportune time for Musk to remind Tesla shareholders that he is focused on growth. And assuming he is successfully able to terminate the deal, there will be nothing stopping him from helping Tesla pull back onto the road and start roaring again. TSLA stock could easily be the biggest winner of the deal falling through. There’s no reason it shouldn’t be.

Musk pulling out of the deal will likely generate the type of momentum that TSLA stock needs to start rising again. Additionally, the pending Tesla stock split will also likely be a positive growth catalyst when it receives shareholder approval on Aug. 4. TSLA’s current downturn makes for an ideal buying opportunity before these trends push it back up.

On the date of publication, Samuel O’Brient did not have (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.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.


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