- Elon Musk said on Wednesday that his tweets are good marketing for Tesla.
- Wall Street analysts feel otherwise: They’re bullish on Tesla, but think Musk is just too distracted.
- Musk’s tweets have gotten him in trouble with shareholders and the courts.
Elon Musk made a much-awaited appearance at Tesla’s fourth quarter earnings call on Wednesday, after the closing bell.
True to form, the CEO tweeted from the earnings call in real time, whilst he doled out favorable stats on the present state of the corporate that sought to place to rest the notion that demand for Tesla’s cars is flagging: the January order rate is almost twice the speed of production, Musk said, and the corporate expects to deliver 1.8 million vehicles by the top of the yr.
The opposite Tesla execs showered investors with as many upsides as possible to counteract the negative press surrounding Musk, the carmaker’s Technoking. Yet still an analyst desired to know the way the brand new owner of Twitter was going to mitigate the brand damage brought on by his loose fingers. Musk’s response was to say his 127 million followers on the platform as an indication that he’s, in his own words, “reasonably popular” and that “Twitter is an incredibly powerful tool for driving demand for Tesla.”
“And I might really encourage corporations on the market of all types, automotive or otherwise, to make more use of Twitter,” he added. “The web value of Twitter, other than a number of people complaining, is gigantic, obviously.”
To a point, the try and smooth things over worked, with quite a few Wall Street analysts issuing buy rankings on Tesla following the earnings call. Tesla’s stock rose over 10% on its fourth quarter earnings results. Investors are momentarily comfortable but still cautious of the uncertainty surrounding the economy and, after all, what Tesla’s CEO will do next.
But in addition they want it to be known that they are not buying into Musk’s spin on his Twitter escapades.
Wall Street is bullish on Tesla, but bearish on Musk
Tesla’s $24.3 billion in revenues for the fourth quarter outperformed Wall Street’s estimates of $24.2 billion. One other upside was the earnings per share of $1.19, which beat the Street’s estimates of $1.13. Tesla took hits on its margins due partly to the value cuts it performed on its vehicle lineup, and from the expansion of its Nevada factories.
Goldman Sachs equity analyst Mark Delaney wrote in a note to clients that the corporate’s stock will outperform the market with a price goal of $200. Nonetheless, Delaney asserted that one big challenge to his thesis was a “key person risk,” an apparent reference to Musk.
John Murphy at Bank of America considers Musk’s “regular media updates on Twitter” a headwind for the stock since it serves “as a distraction for TSLA management.” All in all, nevertheless, Murphy believes the corporate sits at a good valuation and took a neutral position on the stock.
Dan Ives of Wedbush Securities stays bullish on Tesla. While he’s often been a critic of its top brass, looked as if it would praise Musk for not shying away from the concerns surrounding Twitter, and stated that the CEO is “embracing the complex spider-web relationship between Twitter and Tesla which can have a mixed response from investors.”
Wall Street thinks Twitter is a costly distraction
Musk isn’t improper in that he and Tesla are reasonably popular on Twitter. Musk’s 127 million follower count is second to former US President Barack Obama’s 133 million. Moreover, Tesla, with over 19 million followers, outpaces some other automotive company’s account on the platform. (At a look, BMW’s 2.4 million followers seems the closest.)
But how a lot of Musk’s and Tesla’s followers converted to sales based on the content coming from those accounts? And the way a lot of those followers are bots, rarely used accounts, or there to gawk on the side show of the CEO billionaire? That is a component of the query Musk didn’t answer through the call.
Whether Musk and company desires to admit it; regardless of the Technoking says and does on- and off-line has affected Tesla’s brand, and subsequently its stock.
Tesla’s stock price fell not long after Musk announced the Twitter deal and reports revealed that he would use his Tesla shares to assist finance the deal. Musk tried to lift the stock by saying he would not use Tesla shares, but that was a tough promise to maintain. Musk is alleged to have sold $23 billion price of Tesla shares last yr to support the debt and equity purchase of Twitter for $44 billion.
The corporate’s stock fell more after the acquisition finished in October and once more when news of Musk’s brutal company restructuring made headlines. By the top of 2022, the stock had lost greater than half (62%, to be precise) of its value since April.
Musk’s tweets have also landed him in trouble with investors and Tesla owners. Last week, he took the stand at a shareholders trial to defend his infamous 2018 “funding secured” tweet. Insider has previously reported that Tesla owners and investors have been so ruffled by Musk’s controversial tweets that some have ditched the brand.
But Tesla’s stock was facing greater than Twitter drama last yr. The corporate was coping with supply-chain issues, inflation, and changes to the Inflation Reduction Act. On top of all that, consumers’ pockets were tightening from uncertainty around the longer term of the economy, causing a slump in demand. As in most things, there’s all the time more to the story — but you may’t deny the impact of Musk’s Twitter habits, either.
Most of the analysts said they’re looking forward to Tesla’s Investor Day on March 1 where the corporate will share more about its growth plans. Ives identified, the Twitter noise is beginning to dissipate and the demand story shall be front and center for 2023.