Wedbush removes Tesla from its top stocks list, says Twitter deal an 'albatross' - CNBC
Tesla is no longer a top investment idea, Wedbush analyst Dan Ives said Thursday. Ives removed the stock from the firm's "Best Ideas list" after what he called a "very nervous few months" for Tesla shareholders amid Elon Musk's purchase of Twitter. "They [shareholders] remain the ones that have been punched again and again by the Musk Twitter antics and the stock now is deep in the investor penalty box until deliveries hit in early January and we get a better sense of the 2023 delivery/production trajectory," Ives said in a note to clients. Ives lowered his price target of the stock to $250 from $300, which presents an upside of 40.8% over last close, while keeping its outperform rating. He noted that Tesla's stock has lost about 25% since the Twitter deal closed in late October, with his impact on the company getting "worse by the day." The "Twitter train wreck disaster," as he calls, it, has played out over recent months. The billionaire had backed off plans to purchase the social media platform before eventually going through with the deal days before he would have gone to court over it. Musk originally tried to terminate the deal over concerns related to the volume of Twitter accounts not run by real people. Since taking over at the end of October, the "PR nightmare" has continued as Musk laid off thousands of Twitter staff members before reportedly asking some to return. Musk has considered changing "verification" on the platform available to any user that pays a monthly fee after it was previously reserved for notable figures and locking all content behind a paywall . Musk has "tarnished" Tesla's story and stock in turn, Ives said. His continued selling of the stock to raise enough money for the Twitter deal has created an "agonizing cycle" for investors to navigate and left them in an "albatross." The stock could also be hurt if demand decreases due to the impact of Musk as brand perception remains important in the electric vehicle market. "More worrying is that this Twitter 'Money Pit' situation will never end and continue to take up money, time, and attention from Musk instead that could be focused on Tesla," Ives said, noting that Twitter is a far larger commitment to run than SpaceX, Musk's private company focused on spacecraft engineering. He also said it is hard to separate Tesla's brand from Musk's personal one, as the business is the "golden child" of his corporate empire. Ives likened the electric vehicle maker's impact to that of Apple in the personal technology space, while noting Musk "grit and strategic vision" could once be heralded as it got the company through what he described as enormous challenges. "Now sitting on top of the peak of the mountain with Tesla in a massive position of strength Musk has managed to do what the bears have unsuccessfully tried for years ... crush Tesla's stock by his own doing in what we view as a purely painful dark situation," Ives said. — CNBC's Michael Bloom contributed to this report.
Tesla CEO Elon Musk is trying to buy Twitter and manage multiple companies at the same time.
James Glover II | Reuters
Tesla is no longer a top investment idea, Wedbush analyst Dan Ives said Thursday.
Ives removed the stock from the firm's "Best Ideas list" after what he called a "very nervous few months" for Tesla shareholders amid Elon Musk's purchase of Twitter.
"They [shareholders] remain the ones that have been punched again and again by the Musk Twitter antics and the stock now is deep in the investor penalty box until deliveries hit in early January and we get a better sense of the 2023 delivery/production trajectory," Ives said in a note to clients.
Ives lowered his price target of the stock to $250 from $300, which presents an upside of 40.8% over last close, while keeping its outperform rating. He noted that Tesla's stock has lost about 25% since the Twitter deal closed in late October, with his impact on the company getting "worse by the day."
The "Twitter train wreck disaster," as he calls, it, has played out over recent months. The billionaire had backed off plans to purchase the social media platform before eventually going through with the deal days before he would have gone to court over it. Musk originally tried to terminate the deal over concerns related to the volume of Twitter accounts not run by real people.
Musk has "tarnished" Tesla's story and stock in turn, Ives said. His continued selling of the stock to raise enough money for the Twitter deal has created an "agonizing cycle" for investors to navigate and left them in an "albatross."
The stock could also be hurt if demand decreases due to the impact of Musk as brand perception remains important in the electric vehicle market.
"More worrying is that this Twitter 'Money Pit' situation will never end and continue to take up money, time, and attention from Musk instead that could be focused on Tesla," Ives said, noting that Twitter is a far larger commitment to run than SpaceX, Musk's private company focused on spacecraft engineering.
He also said it is hard to separate Tesla's brand from Musk's personal one, as the business is the "golden child" of his corporate empire. Ives likened the electric vehicle maker's impact to that of Apple in the personal technology space, while noting Musk "grit and strategic vision" could once be heralded as it got the company through what he described as enormous challenges.
"Now sitting on top of the peak of the mountain with Tesla in a massive position of strength Musk has managed to do what the bears have unsuccessfully tried for years ... crush Tesla's stock by his own doing in what we view as a purely painful dark situation," Ives said.
— CNBC's Michael Bloom contributed to this report.
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