Many investors of Tesla Inc. Disappointed watching Elon Musk plunge into the battle to buy Twitter made him no longer pay attention to the electric car maker.
Many investors of Tesla Inc. The disappointment of watching Elon Musk dive into the battle to buy Twitter made him no longer pay attention to the electric car maker. Now that the deal is done, some are worried Twitter is an even bigger drag on Tesla than it was in the past.
Shares of Tesla have plummeted 46% this year, compared with a 28% drop in the Nasdaq 100. However, unlike large-cap tech companies that have seen similar setbacks. or larger, such as Meta Platforms Inc., Tesla’s earnings estimates are actually higher than they were a year ago.
Many of Tesla’s bulls see Musk’s unique management style as the company’s biggest advantage over hundreds of years-old automakers around the globe. However, he has been so deeply involved in overhauling the social media company that he said this week that he has too much to do and is working “from morning to night, seven days a week.” week”.
“The question some investors are asking is how many balls can he keep while he juggles all these responsibilities?” Zacks Investment Management’s Brian Mulberry said. “The concern is that there are only so many hours in the day for Musk to manage all these projects and we’re starting to see stock prices drop because of that.”
Tesla did not respond to a request for comment on Musk’s workload. However, Musk, during a test involving his Tesla payment plan in Delaware on Wednesday, said he’s currently spending almost all of his time reorganizing Twitter. He expects the “fundamental restructuring” to be completed by the end of next week.
In addition to Tesla and Twitter, his other ventures include Space Exploration Technologies Corp., or SpaceX, the tunnel builder Boring Co. and neurotech company Neuralink Corp.
While Tesla investors are most worried about Musk’s focus shifting away from the electric vehicle maker, there are other risks as well. For example, after taking over Twitter, Musk asked engineers from Tesla to review the Twitter workers’ code.
Zacks’ Mulberry said that while Musk is expected to spend a lot of time on his latest acquisition in the first month or so, “if he continues to employ employees from other companies like Tesla or SpaceX, to continue to help Twitter, there is obviously going to be a decline in productivity for other companies.” Zacks owns Tesla stock through his All-Cap Core fund.
These latest doubts have also dampened hopes that once the Twitter deal is closed and Musk has completed the sale of his relevant Tesla stock, the cloud over the automaker’s stock will dissipate. variable. For one, it’s hard to say for sure that Musk won’t sell more stock anytime soon, as he most recently sold about $4 billion to Tesla despite assurances from the CEO that he’s done selling.
“Elon Musk has never dispelled the notion that he is the man behind Tesla,” said Mark Stoeckle, chief executive officer of Adams Funds. “And so the market cannot give enough credit to other current managers at SpaceX, Tesla or Boring Co. to run those companies without Musk.” Adams owns about 143,000 Tesla shares.
Even without the chaos of Twitter, Tesla still has a lot of work to do. The risk of a recession has sent US stocks lower this year, with valuations of growth companies like Tesla hit the hardest. At the same time, analysts have warned that demand for their electric cars could falter as consumers are squeezed between high prices and slowing growth.
However, investors still have a lot to look forward to as the Twitter glut is gone and the market stabilizes. As a global leader in electric vehicles, Tesla will benefit from the auto industry’s shift to battery-powered vehicles from gas-powered vehicles. In the US, President Joe Biden’s Inflation Reduction Act is also expected to give a boost to electric cars, helping Tesla.
Meanwhile, Wall Street analysts’ average price target for Tesla suggests a 52% return over the next 12 months.
“I believe the Twitter noise will disappear by the end of the month as Musk handles Twitter issues,” said Gary Black, managing partner at The Future Fund, which advises the Future Fund Active ETF. At that point, he expects Tesla’s stock to be boosted by the growing use of electric vehicles and the launch of the company’s Cybertruck pickup truck, among other factors.
