Investor sentiment on Tesla weakens amid Elon Musk’s Twitter drama, Morgan Stanley says

• Investor sentiment in the direction of Tesla is on the decline as CEO Elon Musk runs Twitter, in accordance with Morgan Stanley.
• Analyst Adam Jonas surveyed traders and located that the majority respondents consider Tesla’s worth decline could possibly be attributed to the Twitter fiasco.
• “We see a window of shopping for alternative close to our $150 bear case,” he stated.

Elon Musk’s ongoing Twitter drama has been a drag for Tesla’s inventory worth, and it might expose the electrical automobile maker to additional dangers, Morgan Stanley stated in a be aware on Monday.

Musk has been making controversial selections since his takeover of Twitter final month, with a back-and-forth sequence of firings and hirings, along with permitting controversial figures again on the social media platform. Most just lately, Musk has picked a struggle with Apple over its App Retailer charges and the iPhone maker’s decision to pause most of its advert spending on Twitter.

Morgan Stanley fairness analyst Adam Jonas surveyed traders concerning the ongoing Twitter drama and its potential impression on Tesla’s inventory worth in addition to its underlying enterprise.

“Our investor survey reinforces our views that Elon Musk’s current involvement with Twitter has contributed to unfavorable sentiment momentum in Tesla shares and will drive a point of adversarial draw back skew to Tesla fundamentals,” Jonas wrote.

Practically 75% of survey respondents consider the Twitter state of affairs accounted for a good portion of Tesla’s current share worth underperformance, in accordance with the be aware.

Tesla’s hunch has been notable since Musk closed the Twitter deal in late October, with the inventory falling 25% and dropping $150 billion in market worth, in comparison with the S&P 500 being up 3%.

Maybe much more regarding from the survey is that about 65% of respondents stated the Twitter fiasco “could have unfavorable or barely unfavorable impression on Tesla’s enterprise going ahead.”

The potential draw back dangers to Tesla uncovered by Musk’s concentrate on Twitter embody shopper sentiment/demand, business partnerships, authorities relations/assist, and capital markets assist, in accordance with the be aware.

“Whereas troublesome to quantify, we consider there should be some type of sentiment ‘circuit breaker’ across the Twitter state of affairs to calm investor considerations round Tesla,” Jonas wrote.

However regardless of the unfavorable investor sentiment in the direction of Tesla resulting from Musk’s involvement in Twitter, Morgan Stanley thinks the inventory remains to be a purchase. “We see a window of shopping for alternative close to our $150 bear case.”

Jonas maintains an “Obese” score and $330 worth goal for Tesla, representing potential upside of 83% from present ranges.

“In a slowing financial surroundings, we consider Tesla’s ‘hole to competitors’ can doubtlessly widen, significantly as EV costs pivot from inflationary to deflationary,” he stated.

Jonas additionally highlighted the corporate’s uncommon capacity to generate earnings earlier than incentives on the sale of EVs, and its “distinctive place” to safe the availability of battery metals mandatory to supply EVs at multimillion-unit scale.