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Topline

Though the stock market rallied on Thursday after a better-than-expected inflation report, one formerly bullish Tesla analyst has soured on the stock during its recent plunge, blaming CEO Elon Musk for souring investor sentiment as he seemingly focuses attention on—and plows money into—Twitter.

Key Facts

In a morning note to clients, Wedbush analyst Dan Ives cut the firm’s price target on Tesla shares to $250—less than 18% of a bullish $1,400 target from January—and cautioned the next few months should have Tesla investors “very nervous” as the stock reels from a steep 43% collapse since late September.

“Musk has essentially tarnished the Tesla story,” Ives wrote, saying the billionaire’s “Twitter antics” have fueled the stock crash and could materially damage Tesla’s brand amid controversy around Musk cutting 50% of Twitter’s employees only to reportedly plead for some to return, and then once again selling Tesla shares last week.

Citing the stock sales, including $3.9 billion this past week, Ives laments that Twitter has become a “money pit” for Musk and worries the time he’s taking to restructure the firm could be better spent on Tesla, which is expected to report vehicle deliveries in early January.

Despite rallying with the broader market Thursday, shares of Tesla have collapsed nearly 54% since hitting an all-time high of more than $400 in January, falling to about $189 and wiping more than $650 billion in market value.

Other analysts have also voiced concerns: After Tesla reported third-quarter earnings (which beat expectations), Bernstein analyst Toni Sacconaghi told clients in a note that the quarterly conference call “didn’t sit well” with him, calling answers to many questions “curt and almost dismissive” as Musk “repeatedly [made]

very bold prognostications about Tesla’s future.”

Among those more optimistic, Bank of America’s John Murphy said the third quarter results “look[ed] pretty good” and that the firm remains a “trailblazer” in the electric vehicle market as he raised his price target to $325 in a post-earnings note, implying more than 70% upside from current levels.

Crucial Quote

“Love him or hate him, it was hard to deny Musk’s grit and strategic vision around Tesla … again and again were massively successful over the years… despite enormous challenges,” Ives said Thursday. “Now Musk has managed to do what the bears have unsuccessfully tried for years—crush Tesla’s stock by his own doing.”

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Contra

Despite Tesla’s collapsing value, notable Tesla bull Cathie Wood is seemingly still optimistic about the stock. The high-profile stock-picker’s Ark Invest purchased nearly 40,000 Tesla shares on Wednesday as shares hit a two-year low. The stock remains her flagship fund’s second-largest holding, commanding some $550 million in market value.

Key Background

The Musk-Twitter saga started when the billionaire acquired a 9% stake in the firm back in April and within weeks announced a bid to acquire it at a massive premium—only to try to “terminate” the deal this summer. After a series of lawsuits in which Musk voiced concerns about fake accounts, the acquisition ultimately went through last month, with Musk taking over as chief executive and immediately disbanding the company’s board and firing its CEO and chief financial officer. Last week, the Tesla chief shed some light on his struggles, saying Twitter was a “poorly managed business” he bought “on the basis of what it could become” and blaming activist groups for fueling advertiser concerns about the proliferation of hate speech on the platform.

Further Reading

Elon Musk Has Sold $3.9 Billion Of Tesla Stock Since Friday (Forbes)

Twitter’s Security And Privacy Leaders Quit Amidst Musk’s Chaotic Takeover (Forbes)

‘Nothing Has Worked’: Musk Laments Loss Of Twitter Advertisers And Acknowledges Trying To Back Out Of Deal (Forbes)

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