In just the first day of trading on the NASDAQ in 2023, Tesla stock dived 14% from the previous close. The sharp single-day decline takes Tesla’s 12-month share price collapse to just over 70%.
The falls come as Elon Musk seemingly turns his attention to his new venture, Twitter, and also as the market reevaluates the multiples assigned to so-called growth stocks, prior to Federal Reserve quantitative tightening and global inflation volatility.
So, how can Musk and Tesla’s management turn around the former market darling’s fortunes?
Daniel Ives, the managing director of equity research at Wedbush Securities, has just outlined the 7 things he believes Elon Musk must do in 2023 to stop the Tesla stock rout.
1) Name a Twitter CEO
Ives says this need to be done by the end of January.
“He cannot be running Twitter and Tesla at the same time and I think that’s from an attention perspective,”.
2) Lay out realistic exceptions for Tesla in 2023
“If you look at 2022, that was part of the issue with the stock because the street begins to view them as ultimate numbers that can’t be hit,” said Ives.
3) Stop selling Tesla stock
Ives accuses Musk of using Tesla as his “personal ATM machine” to fund Twitter.
“Stop selling stock! I think if he does that, we start to see some of that bloom come back to the rose in Tesla stock, which right now is way in the investor penalty box which we’re seeing play out even in the first trading day.”
4) Overhaul the board
“Right now that’s an issue for investors, it feels like the Board is more of a rubber stamp board. You need more independence, you need more expertise from the technology and from an EV perspective,” said Ives.
5) Launch stock buybacks
According to Ives, if Tesla undertakes stock buybacks it will be a major boost to investor confidence.
“Right now confidence is what investors need.”
6) Focus on Tesla, not Twitter
Ives also took aim at Musk’s apparent lack of focus on Tesla. He said it appears he’s distracted on Twitter and investors don’t like all the tweeting.
He called out the fact that Musk was “just doing random tweets” on Tuesday, the same day Tesla stock suffered major declines.
7) Forge ahead with Full Self Driving (FSD)… And get it right
Here’s what Ives said about FSD.
“When you look at FSD… that’s the key to some of the future valuation. We do have Robo-taxis and everything else, but it starts with FSD and that’s the next leg of the Tesla growth story.”
Still bullish on Tesla stock
Despite the long to-do list Ives outlined for Elon Musk, the veteran investment banker said he’s still bullish on Tesla.
He has a $175 price target for the stock.
“I do think a lot of bad news has been baked in here. If you have a longer-term view… then the stock is oversold here.”
Source: asiamarkets
