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

Zinger Key Points
  • Tesla stock hasn't looked this cheap since the peak of COVID-19 in March 2020, Gary Black says.
  • He sees a disconnect between the stock price and value.

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.

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confrontation with the advertisers who left the platform and the new $8 per month verification protocol that was later withdrawn.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.

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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Posted In: Analyst ColorNewsAnalyst RatingsTrading IdeasElon MuskFuture FundGary Blacktwitter
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