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The Street
The Street
Martin Baccardax

Tesla Sentiment, Fundamentals Affected By Musk's Twitter Purchase - Morgan Stanley Survey

Tesla (TSLA) investors see Elon Musk's purchase of Twitter as having both a negative impact on the carmaker's share price and the potential to ultimately erode its underlying fundamentals, a Morgan Stanley survey indicated Tuesday.

Morgan Stanley analyst Adam Jonas, a long-time Tesla bull, noted the bank's recent investor survey found that nearly two-thirds of those polled said Musk's $44 billion purchase of the social media platform would have a "slight negative" or "very negative" impact on Tesla's business. Around 30% felt Musk's involvement would be "neutral" for the carmaker, while only 5% saw it as a net positive. 

Jonas, who carries an 'overweight' rating with a $330 price target on Tesla stock, said last week that while the ongoing distraction of CEO Elon Musk's foray into Twitter will likely expose investors to added risks, the group remains on pace to grow sales by around 37% next year, generate $15 billion in free-cash-flow and consolidate its position as the word's dominant EV player.

“Our investor survey reinforces our views that Elon Musk's recent involvement with Twitter has contributed to negative sentiment momentum in Tesla shares and could drive some degree of adverse downside skew to Tesla fundamentals.”

Tesla shares were marked 0.25% higher in early trading Tuesday to change hands at $183.80 each, a move that would still leave the stock down more than 50% since Musk made his intentions to buy Twitter public in early April.

Last week,  Citigroup analyst Itay Michaeli lifted his rating on Tesla to 'neutral' from 'sell', while boosting his price target by around $35 to $176 per share, arguing the stock's year-to-date decline of around 58% has "balanced out the near-term risk/reward" for Tesla investors.

"To be sure, macro/competitive concerns are likely to remain an overhang with capacity rising, but as we’ve previously written, in a hard landing scenario Tesla’s long-term competitive position likely also improves and potentially further enhanced by (President Joe Biden's inflation reduction act)," Michaeli wrote. 

Earlier this month, longtime Tesla bull Dan Ives of Wedbush removed the electric carmaker from his 'best ideas' list citing what he called the "albatross" of Elon Musk's $44 billion Twitter takeover.

Ives said Tesla investors face "a very nervous few months" awaiting Tesla's fourth quarter delivery figures as Musk focuses his attention on Twitter and it myriad issues, and lowered his price target on the stock by $50, to $250 per share, while maintaining his 'outperform rating' in a scathing note that included pointed attacks on Musk's recent social media ambitions.

"In what has been a dark comedy show with Twitter, Musk has essentially tarnished the Tesla story/stock and is starting to potentially impact the Tesla brand with this ongoing Twitter train wreck disaster," Ives wrote.

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