Saturday, December 3, 2022

Is Tesla Stock Crash Over? Analysts Think It Might Be

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Topline
As Tesla stock tumbles to new two-year lows, a rash of analysts are becoming increasingly optimistic the worst may be over for shares of the electric-vehicle maker, saying the market backlash stemming from CEO Elon Musk’s involvement in newly acquired Twitter could have reached its peak—even if it’s unclear how long shares will take to fully recover.

Shares of Tesla have plunged nearly 30% since Musk’s acquisition of Twitter closed.

Copyright 2020 The Associated Press. All rights reserved.

Key Facts

In a Wednesday morning note to clients, Morgan Stanley analyst Adam Jonas said Tesla’s recent collapse—which has pulled prices down 54% this past year—may present an “emerging… value opportunity” for investors, as current prices of about $170 approach a projected worst-case of $150.

Jonas stopped short of predicting exactly how soon the stock may recover, but reiterated a price target of $330 for Tesla—suggesting shares could skyrocket some 94% over the next year.

In a morning email, Wedbush analyst called Tesla’s stock plunge “overdone,” blaming it on concerns Musk may sell more Tesla stock to fund Twitter’s cash burn and Musk’s “brand deterioration” as investors worry he’s “all focused on Twitter instead of Tesla for now.”

Nevertheless Ives, who reiterated a bullish price target of $250, says Tesla remains on track to produce 2 million vehicles this year—a “very impressive” feat considering a “jittery” macroeconomic backdrop that has prompted many electric vehicle firms to cut costs.

“Musk must reassure investors … the Twitter soap opera will not interfere with the longer term Tesla growth story,” says Ives, adding the Twitter “overhang” will likely weigh on Tesla stock at least until the carmaker reports fourth-quarter earnings in late January, which Wedbush believes could reignite confidence among investors.

Citi analyst Itay Michaeli struck a similar tune Wednesday: Though Citi has issued one of the lowest Wall Street price targets for Tesla—at $176—Michaeli upgraded Tesla shares to neutral in a morning note, telling investors the stock’s pullback has made prices much more reasonable.

Big Number
$289. That’s the average price target for Tesla shares among Wall Street analysts—suggesting 70% upside, according to FactSet.

Key Background
Shares of Tesla skyrocketed to an all-time high last November but have racked up big losses after Musk soon started selling shares and this year turned some attention to social media giant Twitter. “At the end of the day Musk is Tesla, and Tesla is Musk,” says Ives. “Any black eyes for Musk will be reflected in Tesla’s stock, and this speaks to Tesla being down 26% since the Twitter deal officially closed in late October.” Adding to concerns for investors, the Federal Reserve’s interest rate hikes have battered market sentiment, pushing the tech-heavy Nasdaq down 30% this year.

Forbes Valuation
$183 billion. That’s how much 51-year-old Musk, the world’s richest person, is worth, according to Forbes estimates.

Further Reading
How Elon Musk’s Twitter Takeover Is Ruining His Own Myth—And Tesla’s Stock (Forbes)

Elon Musk Has Sold $3.9 Billion Of Tesla Stock Since Friday (Forbes)

Tesla Stock ‘Tarnished’ By Musk’s Twitter Antics—‘Very Nervous’ Months Ahead After $650 Billion Crash (Forbes)

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