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- Elon Musk said Wednesday that his tweets are good marketing for Tesla.
- Wall Street analysts feel differently: They are optimistic about Tesla, but think Musk is too distracted.
- Musk’s tweets got 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, CEO tweeted from earnings call in real time, even as he offers favorable statistics about the current state of the company seeking to quell the notion that demand for Tesla’s cars is dwindling: the rate Orders in January nearly doubled the production rate, Musk said, and the company expects to deliver 1.8 million vehicles by the end of the year.
Other Tesla executives shower investors with many positives as possible to combat the negative press surrounding Musk, car manufacturer’s technology. However, one analyst still wants to know how the new owner of Twitter will minimize the brand damage caused by his loose fingers. Musk’s response was to mention his 127 million followers on the platform as a sign that he is, in his words, “reasonably liked” and that “Twitter is an extremely powerful tool to drive demand for Tesla.”
“And I would really encourage companies of all types, automotive or otherwise, to take advantage of Twitter more,” he added. “Twitter’s net worth, aside from some complainers, is obviously huge.”
To some extent, the attempt to calm things down has worked, with several Wall Street analysts giving Tesla a buy rating after the earnings call. Shares of Tesla jumped more than 10% on the back of fourth-quarter earnings results. Investors are temporarily relaxed but still cautious with the uncertainty surrounding the economy and, of course, what the Tesla CEO will do next.
But they also want people to know that they don’t believe Musk’s joke on his Twitter.
Wall Street is bullish on Tesla, but bearish on Musk
Tesla’s $24.3 billion in revenue in the fourth quarter outperforms Wall Street Estimates worth $24.2 billion. Another advantage is earnings per share of $1.19, beating Street estimate is $1.13. Tesla has taken a hit on profits in part because of the price cuts it has made on its line of vehicles and because of the expansion of factories in Nevada.
Goldman Sachs equity analyst Mark Delaney wrote in a note to clients that the company’s stock will outperform the market with a price target of $200. However, Delaney insists that a major challenge to his thesis is the “risk of key people,” a clear allusion to Musk.
John Murphy at Bank of America considers Musk’s “frequent media updates on Twitter” a headwind for the stock because it “distracts TSLA management.” Overall, however, Murphy believes the company has a fair valuation and is neutral on the stock.
Wedbush Securities’ Dan Ives remains bullish on Tesla. While he’s often been a critic of its heads, seemingly praising Musk for not dodging concerns surrounding Twitter and claiming that the CEO is “accepting the complicated cobweb relationship between Twitter and Twitter.” and Tesla, this will have mixed reactions from investors.”
Wall Street thinks Twitter is a costly distraction
Musk is not wrong that he and Tesla are quite popular on Twitter. Musk’s 127,000 followers are second to the former US President by Barack Obama 133 thousand. In addition, Tesla, with over 19 million followers, far outstrips the accounts of any other auto company on the platform. (At a glance, by BMW 2.4 million followers seems to be the closest.)
But how many of Musk and Tesla’s followers have converted into sales based on the content coming from those accounts? And how many of those followers are bots, rarely used accounts, or are there to gawk at the billionaire CEO’s sideshow? That’s part of the question Musk didn’t answer during the call.
Whether Musk and the company want to admit it; whatever Technoking says and does online and offline affects Tesla’s brand and therefore its stock.
by Tesla stock price falls It wasn’t long after Musk announced the Twitter deal and reports revealed that he would use Tesla shares to help fund the deal. Musk tried to lift the stock by saying he wouldn’t use Tesla stock, but that turned out to be a tough promise to keep. Musk is said to have sell $23 billion of Tesla stock last year to support debt and buy shares of Twitter for $44 billion.
the company’s shares reduction much more after the acquisition closed in October and again when news of Musk’s brutal corporate restructuring hit the headlines. By the end of 2022, the stock has lost more than half (62% to be exact) of its value since April.
Musk’s tweets also got him into trouble with investors and Tesla owners. Last week, he stood out at a shareholder trial to defend his notoriety Tweet “sponsorship guaranteed” in 2018. Insiders previously reported that Tesla owners and investors were very ruffled hair by Musk’s controversial tweets that some have give up the brand.
But Tesla’s stock faced more problems than drama on Twitter last year. The company is dealing with supply chain issues, inflation, and changes to Inflation Reduction Act. On top of that, consumer pockets are tightening due to uncertainty around the future of the economy, causing demand to drop. As in most things, there’s always more to the story — but you also can’t deny the impact of Musk’s Twitter habits.
Many analysts say they’re looking forward to Tesla’s Investment Day on March 1, where the company will share more about its growth plans. As Ives pointed out, Twitter’s noise is beginning to fade, and demand narratives will become the focus of 2023.
