This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
What happened
On Monday, Tesla (NASDAQ: TSLA) stock hit its lowest level in about 18 months, and the shares continued to move further below the notable $200 level Tuesday. As of 1:53 p.m. ET, the stock was trading down by 1.5% after having touched a new 52-week low of about $187 per share.
So what
The catalyst for Tuesday's decline may have been a new vehicle recall. According to the National Highway Traffic Safety Administration, the recall involves just over 40,000 2017-2021 Model S and Model X electric vehicles (EVs). The issue is the potential for the EVs to lose power-steering assistance under certain road conditions such as bumps and potholes. Tesla began to send out over-the-air software updates on Oct. 11 to recalibrate the vehicles' systems. But after receiving alerts related to the calibration values, Tesla decided to voluntarily recall the affected vehicles.
Now what
As of the start of November, the problem had been addressed in almost all involved vehicles, so the direct impact to Tesla's business should be minimal. But it's another blow to the brand. CEO Elon Musk has repeatedly been in the news surrounding his recent takeover of Twitter. Since that deal closed, Musk has made numerous public comments via the social media platform that may not be helping Tesla's brand.
On Tuesday, a senior Barron's writer published a column in which he warned that Musk's dealings at Twitter may be negatively impacting Tesla shares. Whether his ownership of the social media platform distracts Musk from his duties as Tesla's CEO may not be the issue. As Tesla has grown, he has managed to also run SpaceX and his other businesses. But Musk did take on debt to close his Twitter purchase, and it's conceivable that the cash flow from the business alone won't cover those debt obligations. If he is forced to liquidate more Tesla stock, it could have the short-term effect of driving down the price, and leading others to sell the stock, too.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
