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Should Tesla Shareholders Be Worried About The SpaceX Explosion?

Should Tesla Shareholders Be Worried About The SpaceX Explosion?

A SpaceX rocket exploded on a launch pad in Cape Canaveral on Thursday morning, destroying the rocket and the satellite it was carrying. According to SpaceX, the explosion was an “anomaly” and there were no injuries involved.

While SpaceX is a private company, the impact of the explosion has certainly hit Wall Street. Shares of SpaceX CEO Elon Musk’s other company, Tesla Motors Inc (NASDAQ: TSLA), were falling 4.4 percent in the wake of the news.

While Tesla and SpaceX have no business connection outside of Musk, traders may see the explosion as a blemish on Musk’s reputation for quality. Despite the fact that Tesla has reported net operating losses for 14 consecutive quarters, hasn't generated positive cash flow since 2014 and hasn’t shipped more than 50,000 vehicles in a full year, the stock currently has a $30.5 billion market cap. Much of this lofty valuation comes from investors betting on Musk’s reputation and ability to deliver quality products.

Related Link: Chowdhry: Owning Tesla Requires Stamina Because The Company Is 'Sucking Oxygen' From The Traditional Players

Some traders are also concerned that the SpaceX disaster might be a distraction for Musk during a critical time for Tesla. However, Global Equities Research analyst Trip Chowdhry says Musk is a “gifted multi-tasker,” and the only real risk to Tesla from the explosion is the headline risk.

Benzinga took to Twitter to ask whether or not the SpaceX explosion will affect Elon Musk and Tesla in any way. Roughly two-thirds (64 percent) of respondents say it will not.

Posted-In: Global Equities Research SpaceX Trip ChowdhryLong Ideas News Movers Trading Ideas Best of Benzinga


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