Tesla shares saw a rally go up over 8% on Wednesday following a 52-week low. This followed an upgrade by analysts at Citigroup and an indication from Tesla CEO Elon Musk that South Korea was the top choice for their new factory in Asia.
The rebound is a respite for Tesla investors into a broader plunge in the market and a shift out of risky assets. This can be seen in the recent fall in the value of Tesla’s stocks, which has been about half this year.
Citi analysts say the recent pullback has balanced out the risks and rewards. We’re now neutral on TSLA, but in order for us to become bullish on the stock again, we need to gain confidence in a few metrics. Specifically, we need more assurance that the average sale price is going to be sustainable and that FSD deliveries will increase as scheduled.
Tesla has said that the U.S. is one of the first markets for its full self-driving capability. This is called FSD and it costs $15,000 upfront or $199 per month on a subscription basis. Tesla doesn’t say what percentage of users choose this option or how many end their subscriptions.
Tesla has been promising its investors and customers since 2016 that it will be able to make its cars into self-driving vehicles. But, so far it hasn’t been delivered. Tesla drivers must remain attentive while using their autopilot features, with their hands on the steering wheel at all times, ready to take back control of the driving task.
Elon Musk also mentioned on Wednesday that the Citi note he wrote in 2013 was a “view from the future.” Representatives of Tesla were in South Korea this week to talk about ongoing negotiations for a new Tesla factory in the country.
The new attention Tesla has been getting on the stock market is related to Elon Musk’s desire to turn his attention to Twitter. We know it’s always hard when you have a business and you want to try something else too, so we’re happy that he’s finally made the leap.
Tesla shares fell after Musk announced that he was selling millions of his shares in order to buy Twitter and save the company. Earlier this month, Musk sold another $3.95 billion of his Tesla stocks, telling Twitter employees that he did it to save the social media company – but some analysts believe otherwise.
Musk and his team made sudden changes to the platform, which has left many advertisers feeling uneasy about their Twitter marketing campaigns. Plus, civil rights activists have called for further boycotts since Twitter didn’t manage hateful content as promised.
Some Tesla analysts and investors are concerned about potential problems at Twitter. Adam Jonas, an analyst from Morgan Stanley, wrote a report this week about the Twitter situation and what it means for Tesla. Though he still has a buy rating on the stock and sets a $330 price target, Jonas’ report cites concerns in three general areas: consumer demand for electric cars, commercial deals with companies like Uber, government relations – and how the company might fare in the capital markets.
The stock was close to $183 by Wednesday afternoon.
One of Tesla’s largest individual shareholders, as well as other investors, have asked for a massive buyback. In a petition shared on Change.org, influencer Alexandra Merz argues that this would allow the company to “benefit from a currently very undervalued stock price,” and “act before the 1% tax on share buybacks becomes applicable Jan 1, 2023.”
Tesla’s CEO has said that pending board approval, he’s willing to buy back Tesla shares. Last month, Elon Musk said on the company’s third-quarter earnings call that Tesla is likely to announce a significant buyback between $5 billion and $10 billion next year.