Elon Musk needs to soothe investor fears over his Twitter saga as Tesla faces one of the most important moments in the history of the company, Wedbush says
- Tesla's earnings report on Wednesday will be one of the most important moments in its history, Wedbush said.
- Wedbush says Tesla stock has upside in 2023, but Elon Musk needs calm investors over his chaotic Twitter takeover.
Elon Musk needs to soothe investors' fears over his wild Twitter saga as Tesla heads into its fourth-quarter earnings on Wednesday, a moment that marks one of the most important moments in the car maker's history, according to Wedbush.
"While every quarter is important for Tesla we would highlight this upcoming call and guidance commentary as one of the most important moments in the history of Tesla and for Musk himself," Wedbush's Dan Ives said, noting that Tesla faces higher competition and a more dire macroeconomic outlook than ever before. What's more, Elon Musk is struggling against his own negative headlines surrounding the Twitter saga, which he will have to address for investors to get comfortable with the stock again.
"With all the worries about Musk's attention on Twitter, selling Tesla stock, [naming] a new CEO, and other noise created by this ongoing soap opera … Elon needs to give investors comfort around this tight wire balancing act and reiterate his goals for the year and lay out the strategic vision despite a near-term dark macro," the note added.
The company's stock tanked 65% in 2022 amid rising inflation, a strong dollar, and high interest rates. The sell-off was exacerbated by Elon Musk's chaotic takeover of Twitter, which involved dumping over $40 billion of his own Tesla shares.
The move has damaged Musk's personal brand, which in turn, has damaged Tesla's brand, analysts say. Some Tesla investors have already called for Musk to step away from Twitter or get a new CEO for Tesla, showing waning trust in the tech titan as he remains under public scrutiny.
"Musk … has essentially gone from a superhero with a red cape to a villain in the eyes of many investors after the ongoing Twitter fiasco," Ives said.
The Wedbush note added that Musk easing investors' concerns could be a bullish factor in tomorrow's call. The stock could also benefit if Tesla addresses how recent price cuts in the US, Europe, and China will affect its profit margins, and if Musk revises Tesla's 50% growth target this year to a more realistic 35%-40%, Wedbush said.
The Wedbush analysts estimated Tesla stock to rally 20% by the end of the year to $175. Shares have already rebounded from lows in 2022, gaining 32% year-to-date.
Other commentators remain bullish on Tesla despite its dismal performance in 2022. Canaccord Genuity senior analyst George Gianarikas urged investors to buy Tesla stock before tomorrow's earnings call, as many headwinds facing the electric vehicle maker have already been priced in.
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