Twitter is becoming a little musky as the new billionaire owner, Elon Musk, struts his stuff on the social media platform, to the dismay of his Tesla followers.
What’s Happening at Twitter?
Twitter has been on a rollercoaster ride since billionaire extraordinaire Elon Musk purchased the social platform for $44 billion and came out guns blazing. Not only has the purchase changed the status of Twitter (blue check mark secured) from a public to a private company, but Musk has also fired some of the top Twitter executives in the process.
Twitter’s delisting on the 8th of November from the New York Stock Exchange will see Twitter become a private company. Musk merged the social media platform with his other brands, Tesla, and SpaceX, under the new holding company, X Holdings, in the tax-friendly state of Delaware. As part of the approved deal, shareholders of Twitter would receive $54.20 for every share owned, the board of directors will be dissolved, and Elon Musk could appoint a new committee of his choosing.
The latest event that grabbed the world’s attention was the Twitter poll Elon Musk ran, which stated, “Should I step down as head of Twitter? I will abide by the results of this poll.” Over 17.5 million users responded, casting their votes with a majority (57.5%) calling on the new owner to step down. Musk replied, “As the saying goes, be careful what you wish, as you might get it,” after the poll results. Shares in Tesla moved higher by more than 4% after the poll was announced as the EV shareholders hoped that this signalled that the billionaire would return all his focus to the struggling automaker.
Why Tesla?
Tesla Inc has become a focal point of late for investors and activists alike since Tesla CEO Elon Musk bought Twitter and started his crusade around free speech called the “Twitter Files.” This year, shares in the EV maker reached new lows after activists also called on to boycott Tesla after Musk tweeted that his pronouns are “Prosecute/Fauci.”
Shares in Tesla are down over 57% YTD and could move lower if investor concerns that Elon Musk is using Tesla as his piggy bank intensify. The billionaire recently sold over 22 million of his Tesla shares to the value of $3.58 billion, bringing his total number of Tesla shares sold this year to roughly $40 billion to fund his Twitter takeover.
Tesla has been the worst-performing automaker this year which has seen its once $1 trillion market cap dilute to under $500 million. Weakening demand across China has slowed production, the Texas plant is also scaling slower than expected, and a barrage of recalls and government probes are some of the issues weighing in on Tesla’s share price.
Looking toward 2023 deliveries, Tesla shareholders and enthusiasts could see the production and arrival of the Cybertruck and the long-awaited Semi truck. But as hiring freezes and a new round of layoffs loom at Tesla in Q1 2023, it could be hard-pressed to get recharged for the coming year.
Trading Outlook on Tesla Inc (NASDAQ: TSLA)
The price action in Tesla has been in a downward trend over the last year, but luckily there could be light at the end of the tunnel for traders and long-term investors alike if the technicals play out.
Looking at Tesla’s longer-term chart (weekly) below, we can see the formation of a head and shoulders (H&S) technical pattern, which has broken the neckline and proceeded to trend lower. The price action could likely see buyers enter the market at $125.35 a share for a short-term bounce if fundamentals support the move higher back to the $165.76 resistance zone.
If the 125.35 support level does not hold, traders and investors could expect the shares to become cheaper, as the next significant support is around $80.00 a share.
Summary
The possibility of a long entry exists from a rebound of the $125.35 support level, with a potential target point around the $165.76 resistance. If the support does not hold and current market sentiment persists, then the $80.00 a share support comes into focus.
Sources: Twitter, Tesla Inc, Bloomberg, Reuters, US Securities and Exchange Commission (SEC), New York Times, StreetInsider, Electrek, TradingView.
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