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HomeMarketA Tesla Bull Raises More Doubts About Elon Musk's Role at Twitter

A Tesla Bull Raises More Doubts About Elon Musk’s Role at Twitter

Wedbush analyst Dan Ives continues to rate Tesla at Outperform.

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Fabrice Coffrini/AFP/Getty

Elon Musk’s antics on Twitter have often affected
Tesla
shares, but the billionaire’s controversial ownership of the platform has created an overhang on the electric-vehicle stock that has proved difficult for even
Tesla
bulls to shake.

Wedbush analyst Dan Ives, who rates
Tesla
stock at Outperform with a $250 price target, wrote in a note Wednesday that while he is “steadfastly bullish” on Tesla’s growth prospects over the next few years, he thinks the cloud related to Twitter will persist until Musk finds a way to reassure investors. Ives pulled Tesla from his “best ideas” list earlier this month, citing concern about Twitter.

“The Twitter circus show continues to go on with Musk laser focused on turning
around this troubled platform while creating controversy on a daily basis,” Ives wrote on Wednesday. “The problem is while the PR Twilight Zone of Twitter happens for the world to see and advertisers remain at bay while the Musk wild card of content moderation is front and center, the perceived overhang of ‘key person risk’ with Musk is a real overhang on Tesla’s stock and not abating.”

Twitter and Tesla didn’t immediately respond to requests for comment.

Tesla stock was up 5.3% to $178.86 in Wednesday while the Nasdaq Composite was up 0.4%. Citi analyst Itay Michaeli upgraded the stock to Hold from Sell after it had fallen 45% since mid-October, around the time Musk was approaching the close of his Twitter deal.

Ives argues that investors have three main worries related to Twitter. First is that Musk could need to sell more Telsa stock to plug financial holes at the social media firm. The second is that the Twitter sideshow could harm Musk’s personal brand, as well as Tesla’s brand, while the third is that Musk’s attention will be pulled from Tesla to Twitter.

Ives describes “a frustrating dynamic playing out in the market as perception is reality with Musk digging a deeper hole by the day around the Twitter situation.”

The analyst points out that demand and overall production capacity is improving for Tesla. He thinks the firm is on track to deliver two million vehicles in 2023, despite a “jittery macro backdrop.”

“The Twitter overhang risk is truly what is weighing on Tesla shares here and Musk must reassure investors over the coming weeks/month that the Twitter soap opera will not interfere with the longer term Tesla growth story,” he wrote.

Write to Connor Smith at connor.smith@barrons.com

Credit: marketwatch.com

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