Company / Analytics

Analytics, 22 December 2022

Tesla Stock after Musk’s Twitter Deal

Tesla has suffered a down-hill trend with stocks going below the 500 billion dollars market-cap threshold hitting a 2-year low. It has been operating at a 40% lower multiple than the last time the company hit this kind of low. This was back in 2020 after the covid-19 pandemic.

According to Adam Jonas from Morgan Stanley, Tesla has a high growth possibility with a potential of up to a 120% shoot expected in the coming months.

The current downward trend started in early April this year when Tesla founder, Elon Musk announced he had bought a stake in Twitter about 8%. Then in late October, Elon took over as the micro-blogging platform’s owner. Since April to date, the stock has seen a drop of well over 50% underperforming the 15% drop in the S&P 500 index.

Below is a brief analysis of the tesla stock and what you need to consider about the company if you plan to invest in its shares.

Points To Consider On Tesla Stocks

Tesla, like all other car manufacturers, struggles with competition in the EV space and supply-chain issues. The company has cut down on manufacturing in China and now entices its customers to import their products from the U.S.

Tesla, which was trading at 149.87 dollars during writing, is a multinational automotive and clean energy company based in Austin, Texas. According to its quarterly financial report for September 2022, it has a revenue of 21.45 billion dollars and a net profit margin of 15.34%.

On the general outlook, the stock has been doing well since the company went public, recording profits year after year and holding true to its up-ward course. Despite the critics and nay-Sayers who belittled its efforts at first, tesla won Elon Musk the title of the richest man on earth which he held till last week.

Current investors have shown some confidence in the stock after Elon Musk sold 3.6 billion dollars in Tesla shares. This action received a muted response in the market despite the extremely volatile market environment it is currently under.

Despite the fact that solar-powered vehicles among other clean energy options, though preferred, have not been put up for serious consideration, Tesla has surpassed this stumbling block and performed greatly. As the planet’s population in general starts looking to clean energy as tomorrow’s fuel, Tesla may still, just be in its infancy with great growth in its future.

The company is known for its preference for using the latest cutting-edge technology, e.g. the famous self-driving car software and the like, in all its products. This coupled with its new products, like CyberTruck, next-generation roadster, and semi-roadster, expected to hit the market in 2023, make tesla a must-watch for investors.

Tesla has made a good name for itself by giving users a comfortable and easy-to-use interactive software experience and plans on upping its game in this area of service provision making it a top pick for most road users.

In 2020, immediately after the covid-19 pandemic, the stock hit a low, with a split-adjusted figure of 23 dollars then shot up to almost 300 dollars, in the course of 2021. If current statistics are anything to go by, history may be about to repeat itself.

After investors called Twitter to take over a distraction to Musk, which has caused him to spread himself too thin, Elon Musk, founder of Tesla and CEO of Twitter, tweeted on Sunday, initiating a poll to ask his followers’ opinion on whether he should continue on as Twitter’s CEO. At the end of the poll on Monday morning, 57.5% of over 17 million participants said he should step down with 42.5% saying no to this. Though Musk promised to abide by the outcome of the poll, only time will tell if he will keep this promise seeing as he did not give a specific date for this.

After the tweet, Tesla stocks rose 3.3% but lost this spike closing with a 0.24% fall. Analyst Colin Rusch said that the Twitter issue has left the sentiments of Tesla shares severely damaged after this year’s fall of well over 50%.

However, even after underperforming the 15% drop in the S&P 500 index, Tesla shareholders may be up for brighter days ahead with the possible trajectory of Tesla shares pointing to a spike that may be over 100% in the coming months. This is according to Adam Joans, an analyst from Morgan Stanley.

Investor’s note

For long-term investors who follow and understand the company, tesla stocks are still looking good. Despite the recent action in the stock, the company continues to execute and reap the benefits of having a first-mover advantage.

Despite Tesla’s current volatile market environment, the stock’s risk-reward possibilities are still favorable for investors. The pullback in shares has made the store more intriguing from a valuation perspective, while new product launches will help to ensure future growth.

Tesla is still in a very powerful uptrend considering its long-term graph. The ongoing snag caused by the Twitter deals is but a passing thing that may see investors well rewarded soon, for the stress caused.

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