Hobbies, side hustles, extracurricular activities, everyone has them. As long as they don’t get in the way of bringing in a regular income stream, it’s all good.
While things are quite different for the mega-rich, the essence is the same. As such, when looking at the destructive menage a trois of Tesla (TSLA)/Musk/Twitter, Oppenheimer’s Colin Rusch thinks things have now gone too far.
“While we continue to see Tesla evolving EV and autonomous technology in advance of peers and driving costs to levels those peers will struggle to match—and have tried to separate Elon Musk’s non-Tesla endeavors (personal and professional) from our analysis on TSLA—we believe Mr. Musk’s acquisition and subsequent management of Twitter now make that separation untenable,” the 5-star analyst recently said.
The main problem is essentially the way Musk is running Twitter and its implications for the Tesla brand. On account of his seemingly never-ending controversial antics, the departure of Twitter advertisers and users could potentially create a “negative feedback loop” and just as Tesla’s “competitive environment intensifies.”
In a sense, the straw that broke the camel’s back for Rusch is Musk’s decision to ban journalists “without consistent defensible standards or clear communication in an environment where many people believe free speech is at risk.” Such an act crosses the line for the majority of consumers who will be unwilling to continue to support Musk/TSLA, especially those “ideologically aligned with climate change mitigation.”
Combine that with Twitter’s “unclear cash needs and diminishing options for Mr. Musk to serve those needs,” and Rusch thinks the moment is right to move to the sidelines. And it might be a while until it is time to get back in the game. “We believe increasing negative sentiment on Twitter could linger long term, limiting its financial performance and become an ongoing overhang on TSLA,” the analyst summed up.
All told, then, Rusch has downgraded the stock’s rating from Outperform (i.e. Buy) to Perform (i.e. Neutral) without offering a fixed price target. (To watch Rusch’s track record, click here)
However, most Wall Street analysts disagree. While one implores investors to Sell and 8 others join Rusch on the fence, the 18 other recent reviews are positive, all leading to a Moderate Buy consensus rating. There are plenty of gains projected here; going by the $272.41 average target, the shares will appreciate by 121% over the one-year timeframe. (See Tesla stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
