For electric vehicle maker Tesla (TSLA), some of the biggest news emerged not from anything the company did. Rather, the news came from the CEO, Elon Musk. Such news recently emerged, and it was sufficient to give Tesla stock a 1% boost in the premarket. Tesla even managed to keep those gains going into Thursday morning's trading. Regardless of the news, I remain bearish on Tesla, because much of its gains appear to have topped out. The company can only gain for so much longer on the strength of Musk's cult of personality.
Tesla's year, so far, has been marked by a lot of flat ground and a pair of substantial spikes. Tesla led off the year with one such spike, but it lost all the gains of that spike, and then some, over the three months that followed. A recovery came in early March. Meanwhile, by mid-April, Tesla came back to roughly the same point where it started the year. A slide in May retested March lows before starting a slow gain that lasted into October.
Late October, however, brought with it a massive upward spike, sending the company from around $800 per share to over $1,200 per share in a little over two weeks. The spike lost ground quickly, gained most of it back, and then began a steady loss that lasted until about four days ago. That's when a new spike started up that brought the company up over the $1,000 mark once more.
The latest news gave Tesla a bit of edge in the market, as CEO Elon Musk announced that he was nearly finished with his stock sales. Many of the sales already made, reports noted, were pre-arranged sales connected to stock option exercises. Still, the news that the sell-off was coming to an end gave investors a little more confidence.
Musk also came out solidly “pro-doge,” giving the beleaguered Dogecoin a chance to come back. Further, Musk revealed that his support of Dogecoin was rooted in words from founder Billy Markus, who noted that his goal was to “build stuff, make money, and have fun.” Apparently the simplicity of Markus' goals appealed to Musk. Musk tempered this support with another piece of advice, noting that no one should “...bet the farm on crypto.”
Wall Street's TakeTurning to Wall Street, Tesla has a Moderate Buy consensus rating. That's based on 13 Buys, eight Holds, and five Sells assigned in the past three months. The average Tesla price target of $1,004.33 per share implies 5.87% downside potential.
Analyst price targets range from a low of $215 per share to a high of $1,580 per share.
Can't See the Company for the CEOIt's somewhat disturbing that so much of Tesla' s news is being generated by the antics of its CEO. While certainly, Musk has a major hand in getting Tesla to its current point, this is not the first time the his outspokenness has gotten in the way of what the company actually does.
Tesla makes electric vehicles. And right now, they're the leader in such an act, though there are plenty of challenges coming out. Those challenges emerged because Tesla showed the market just what the potential for electric vehicles actually was. Moreover, if we're being fully honest, it was Musk's antics that drew attention to the concept in the first place. While Musk was peddling Boring Company's not-quite-flamethrowers and smoking marijuana live on Joe Rogan's podcast, Tesla was producing a line of electric vehicles that's producing fantastic sales numbers. There's a certain value to Musk's antics. It helps keep the company in the public eye. Every time Musk backs a cryptocurrency or peddles a new bizarre product, people take another look at Tesla. Tesla, meanwhile, is producing cars.
The problem is that the value can backfire. We saw that when the entire company was plunging on the reports of Musk's stock sales. Tesla's performance in the market becomes less about what Tesla is doing and more about what Musk is doing. Granted, one man's activities can be more carefully controlled than the intricate dance of an entire company. But when it's one man making things happen in a company, that detracts from the whole company's efforts.
While Musk is keeping Tesla visible, the company is increasingly harder to spot. A growing body of competitors is eager to chop up the market that Tesla proved existed in the first place. Tesla's dividend history is nonexistent. Tesla's ability to function as a growth stock with a four-figure share price is increasingly under fire. Musk's sideshow can't keep drawing investors forever.
Concluding ViewsTesla is an electric car producer. They make a solid car, though there are some issues there. The ongoing problems with auto-drive systems prove that much. More and more competitors are entering the field, and that's likely to pull at least some business from Tesla. Musk's ability to influence the company's share price is a little alarming, yet it's keeping Tesla in the public eye. For how long that can be maintained, though, it's unclear.
I'm bearish on Tesla because the company these days looks less like a company and more like The Elon Musk Show. Investors need to hear more about what the company is doing instead of what the CEO is doing, and right now, Tesla itself seems to be running out of room to grow.
Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates. Read full disclaimer >
Electric car maker, Tesla Inc. (TSLA) has agreed to stop the video game streaming function called “Passenger Play” when the cars are moving. The decision was taken after the U.S. National Highway Traffic Safety Administration (NHTSA) sighted concerns about vehicle safety.
Meanwhile, Tesla shares rose 5.8% closing at $1,067 on December 23.
Passenger Play FeatureRecently, the NHTSA started a vehicle safety investigation over 580,000 Tesla cars sold since 2017. Responding to the probe, Tesla has decided to stop the “Passenger Play” function in moving cars.
According to Tesla, a software update will lock the video streaming function when vehicles are moving, and allow passengers to play video games only when the vehicle is parked.
The NHTSA said that although the driver of the vehicle cannot play the games, the screen display distracts the driver’s attention causing accidents. The NHTSA says that this distraction may be the possible reason for a 2018 fatal accident of a Tesla car that was on Autopilot mode in California.
NHTSA CommentsThe NHTSA said, “Safety is central to NHTSA’s mission and we are committed to improving safety for all road users. Distraction-affected crashes are a concern, particularly in vehicles equipped with an array of convenience technologies such as entertainment screens. We are aware of driver concerns and are discussing the feature with the manufacturer.”
The agency added, “NHTSA constantly assesses how manufacturers identify and safeguard against distraction hazards that may arise due to faults, misuse, or intended use of convenience technologies, including infotainment screens.”
Consensus ViewRecently, Credit Suisse analyst Dan Levy reiterated a Hold rating on the TSLA stock with a price target of $830, which implies 22.2% downside potential to current levels.
Overall, the stock has a Moderate Buy consensus rating based on 13 Buys, 8 Holds, and 5 Sells. The average Tesla price target of $1,004.33 implies 5.9% downside potential to current levels. Shares have gained 61.2% over the past year.
News SentimentTipRanks’ News Sentiment and Media Buzz Analysis shows the combined News Score based on TSLA’s News Sentiment and Media Buzz.
TipRanks data shows that the News Score for Tesla is currently Positive based on 317 articles published over the past seven days. 79% of the articles have a Bullish Sentiment compared to a sector average of 63% while 21% of the articles have a Bearish Sentiment compared to a sector average of 37%.
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