Tesla Down 50% This Year: Analyst Suggests 3-Point Plan For Elon Musk To Lift Sagging Stock

Tesla Inc. TSLA shares have been on a freefall this year, with Twitter overhang weighing them down, said Future Fund’s Gary Black. Tesla Underperforms Broader Market: Since Elon Musk renewed his interest in Twitter on Oct. 4, Tesla shares have declined about 28% compared to a 1% gain by the Nasdaq 100 Index, Black said.

The stock has shed about 19% since the deal was closed on Oct. 28 versus Nasdaq 100’s 2% advance, he said.

Since Elon reversed course and agreed to complete the takeover of $TWTR on 10/4, $TSLA -28% vs NDX +1%. Since the deal closed on 10/28, TSLA TSLA -19% vs NDX +2%. Clearly, the TWTR overhang persists. pic.twitter.com/2E0sP43MJV

— Gary Black (@garyblack00) November 17, 2022

Twitter Gets Worse: Even as Tesla stock languishes amid the Twitter overhang, fundamentals at the social media platform have deteriorated. Black noted the platform lost significant advertising revenue following the 50% job cuts, Musk’s confrontation with the advertisers who left the platform and the new $8 per month verification protocol that was later withdrawn.

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Tesla Valuation Extremely Attractive: Tesla hasn’t looked this cheap since March 2020 amid the COVID-19 peak, Black said.

3/ $TSLA has not looked this cheap since March 2020 at Covid’s peak, selling at 32x 2023. 2023 EPS is up +45% YTD, but down -9% since TSLA posted weaker than exp 3Q volumes. $TSLA price and value have become disconnected. pic.twitter.com/BvhqzHM6Ct

— Gary Black (@garyblack00) November 17, 2022

Recommendations For Reversal: For Tesla shares to resume the uptrend seen late last year, Musk has to pursue the following three-point plan, Black said.

• Tesla has to show strong fourth-quarter volumes without resorting to a second price cut.
• Twitter ad revenue has to stabilize to reduce the risk of Musk selling more shares.
• Tesla has to announce a $10 billion stock buyback to show management’s conviction that the stock is cheap.

Price Action: Tesla closed Thursday’s session down 2.01% at $183.17, according to Benzinga Pro data.

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