Colin Langan, an auto analyst at Wells Fargo, says Elon Musk’s current focus on his Twitter acquisition and reorganization project is not the only factor weighing down Tesla share prices.
In an interview with Yahoo finance, Langan said, “It’s very concerning about the weakness that we’re seeing in China. We are seeing incentives go up, and sales actually are not increasing there. And [a] driving concern is: Are we going to start seeing that in the U.S. and Europe? Is that just sort of the early days of softening demand? And I think that is really more of the large institutional investors’ top concern.”
Since November 2021, Tesla shares have slid roughly 67% off their peak, marking the largest slide the stock has seen since it debuted in 2010. Just this month alone, it is down 26%.
The losses for the stock accelerated in April, after CEO Elon Musk offered to buy Twitter, and continued through his closure of the deal in October. Among investors online, Musk’s distraction from Tesla as he oversees the complex reorganization of the social media giant is seen as being as troubling as the downturn in global sales.
Even as Tesla shareholders quietly fret his focus is elsewhere, each new day brings a sweeping drama surrounding the billionaire CEO. On Sunday Musk tweeted the question, “Should I step down as head of Twitter? I will abide by the results of this poll,” followed by a Twitter survey.
When the poll closed, of the 17.5 million votes, 57.5% had voted for him to step down. On Tuesday Musk promised to step down, but said he would need to find a successor first, and that he would remain in full control of engineering at the social media platform. He did not expound upon a timetable for the turnover, leaving still more uncertainty over when he will return to Tesla, and to what degree.
Nevertheless, on Monday Tesla opened higher at the prospect Musk might leave Twitter in the hands of a subordinate, and return to manage the automaker full time. However as the day wore on, Tesla ended down, along with the rest of the broader market.
On Tuesday, the stock continued to fall, losing over 5% in afternoon trading. News that Evercore ISI analyst Chris McNally cut his price target from $300 to $200, added to similar bearish takes from Goldman Sachs, Wedbush, and Oppenheimer, weighing the share price down.
Langan is more moderated in his view of the stock, giving it an Equal Weight rating (Neutral/Hold equivalent), however he acknowledges the Twitter situation bears closer scrutiny from investors, given the polarizing nature of what is going on there.
He added, “Everyone has seen that Elon could multitask, so that is not something traditional institutional investors are that concerned about. But I do think there is rising concern about potential brand damage from some of the headlines that are coming around the Twitter situation.”
