After CEO Elon Musk reversed his decision to get out of buy Twitter (TWTR), Tesla (TSLA) shares fell
by around 25%. Readers may attribute some of the TSLA stock selling to weak Nasdaq markets, which
lost 1.7% in that time.
The market is bracing for two negative developments after Musk owns Twitter. They expect him to sell
billions worth of shares. This transfers his ownership to retail and institutional buyers if the stock has
demand.
Restructuring Twitter will prove very difficult. The micro-blogging site has a poor reputation. It censored
too many prominent accounts. For example, it banned ex-President Donald Trump’s account.
The site reverses past banning policies easily. Doing so will re-open problem accounts, too. Twitter
would need to hire more staff to moderate posts. This adds costs at the worst time. Corporate customers
slashed advertising spending in 2022. They are cutting costs to align with lower revenue as inflation
soars.
Snapchat (SNAP) posted revenue growth in the single-digit percentage last week. This increases the
urgency for Musk to monetize Twitter’s platform. Before that happens, Twitter needs to cut costs.
Rumors that Musk will cut 75% of staff is a likely good start.
For electric vehicle investors, Tesla is the best of the breed. Watch the stock as it attempts to rebound
from here.
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