Elon Musk says his Twitter misadventure has only helped Tesla. Wall Street isn't so sure.
Elon Musk made a much-awaited appearance at Tesla's fourth quarter earnings call on Wednesday, after the closing bell.
True to form, the CEO tweeted from the earnings call in real time, even as he doled out favorable stats on the current state of the company that sought to put to rest the notion that demand for Tesla's cars is flagging: the January order rate is nearly twice the rate of production, Musk said, and the company expects to deliver 1.8 million vehicles by the end of the year.
"And I would really encourage companies out there of all kinds, automotive or otherwise, to make more use of Twitter," he added. "The net value of Twitter, apart from a few people complaining, is gigantic, obviously."
To some degree, the attempt to smooth things over worked, with a number of Wall Street analysts issuing buy ratings on Tesla following the earnings call. Tesla's stock rose over 10% on its fourth quarter earnings results. Investors are momentarily at ease but still cautious of the uncertainty surrounding the economy and, of course, what Tesla's CEO will do next.
But they also want it to be known that they're not buying into Musk's spin on his Twitter escapades.
Goldman Sachs equity analyst Mark Delaney wrote in a note to clients that the company's stock will outperform the market with a price target of $200. However, Delaney asserted that one big challenge to his thesis was a "key person risk," an apparent reference to Musk.
John Murphy at Bank of America considers Musk's "regular media updates on Twitter" a headwind for the stock because it serves "as a distraction for TSLA management." All in all, however, Murphy believes the company sits at a fair valuation and took a neutral position on the stock.
Dan Ives of Wedbush Securities remains bullish on Tesla. While he's often been a critic of its top brass, seemed to praise Musk for not shying away from the concerns surrounding Twitter, and stated that the CEO is "embracing the complex spider-web relationship between Twitter and Tesla which will have a mixed reaction from investors."
Musk is not wrong in that he and Tesla are reasonably popular on Twitter. Musk's 127 million follower count is second to former US President Barack Obama's 133 million. Additionally, Tesla, with over 19 million followers, outpaces any other car company's account on the platform. (At a glance, BMW's 2.4 million followers seems the closest.)
But how many of Musk's and Tesla's followers converted to sales based on the content coming from those accounts? And how many of those followers are bots, rarely used accounts, or there to gawk at the side show of the CEO billionaire? That's a part of the question Musk did not answer during the call.
Whether Musk and company wants to admit it; whatever the Technoking says and does on- and off-line has affected Tesla's brand, and therefore its stock.
The company's stock fell more after the acquisition finished in October and once again when news of Musk's brutal company restructuring made headlines. By the end of 2022, the stock had lost more than half (62%, to be precise) of its value since April.
But Tesla's stock was facing more than Twitter drama last year. The company was dealing with supply-chain issues, inflation, and changes to the Inflation Reduction Act. On top of all that, consumers' pockets were tightening from uncertainty around the future of the economy, causing a slump in demand. As in most things, there's always more to the story — but you can't deny the impact of Musk's Twitter habits, either.
Many of the analysts said they're looking forward to Tesla's Investor Day on March 1 where the company will share more about its growth plans. Ives pointed out, the Twitter noise is starting to dissipate and the demand story will be front and center for 2023.