As Tesla, Inc.‘s TSLA fundamentals falter amid slowing electric-vehicle adoption and increased competition, the company faces pressure to resort to advertising to boost appeal for EV ownership, particularly Tesla models. Against this backdrop, recent news of Tesla launching a paid ad campaign on X, formerly known as Twitter, failed to impress a longtime investor in the company.
What Happened: On Tuesday, a Tesla influencer shared a Tesla ad on X, announcing, “Tesla has started paid advertising on X in the U.S.” The ad featured the Model Y EV, highlighting its status as the best-selling car in the U.S. in 2023, eligibility for the $7,500 EV subsidy, range, safety features, and more.
However, a user on the X platform found the move peculiar and shared a meme depicting Elon Musk as both the advertiser and recipient of the ad spending dollars. Musk acquired X in late October 2022 and has since faced challenges in maintaining advertising revenue on the platform.
Reacting to the post, longtime Tesla investor turned critic Ross Gerber said, “Where is the Tesla BOD [board of directors]???? The most pointless place for Tesla to advertise is on X. So now Tesla is providing charity to X.”
See Also: Everything You Need To Know About Tesla Stock
Why It’s Important: Many analysts and Tesla investors believe that advertising could benefit Tesla, which currently relies heavily on direct sales through its website and showrooms.
Future Fund’s Gary Black questioned Tesla’s reluctance to advertise. Tagging Musk and Martin Viecha, Tesla’s VP of Investor Relations, Black said in a post, “@elonmusk refuses to educate non-EV owners on the benefits of EVs (lower costs, easy to charge, better tech, autonomy, superior performance, good for the environment).”
“Great creative EV comms is fully consistent with Tesla's mission of accelerating the world's transition to sustainable energy.”
Black, however, did not subscribe to Tesla communicating to existing Tesla owners on YouTube and X. “$TSLA has to target ICE owners who don't know anything,” he said.
Under Musk’s leadership, X has undergone significant changes, including workforce reductions and the introduction of a two-tier subscription model. Initially, skepticism over the new management’s approach led to a decline in corporate advertisers on the platform, although Musk managed to regain their support. However, support for anti-Semitic posts by Musk resulted in another wave of advertiser exits from the platform.
According to a Bloomberg report from mid-December, X generated slightly over $600 million in ad revenue in each of the first three quarters of 2023, a significant drop from the $1 billion per quarter run rate seen in 2022.
Tesla ended Tuesday’s session 2.23% higher at $185.10, according to Benzinga Pro data.
Image made via pictures on Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
