Tesla (TSLA) shares bounced from a two-year low Thursday amid a sharp pullback in Treasury bond yields that offset a move by longtime bull Dan Ives of Wedbush, who removed the electric carmaker from his 'best ideas' list citing what he called the "albatross" of Elon Musk's $44 billion takeover of Twitter.
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.
"Tesla's stock is down roughly 25% since the Twitter deal closed. In this white knuckle backdrop, the constant selling of stock (when he said it was done) is an agonizing cycle for investors to navigate," he added. "More worrying is that this Twitter "Money Pit" situation will never end and continue to take up money, time, and attention from Musk instead that could be focused on Tesla."
Tesla shares, which closed at a two-year low of $177.59 each last night, extending their 2022 decline to around 56%, were marked 6.5% higher in early Thursday trading to change hands at $188.90 each.
Musk, who is financing part of the $44 billion required to buy the social media website through his personal stock holdings, sold 19.5 million Tesla shares between November 4 and November 7, at prices ranging between $197.196 and $208.731 per share, across a total of twelve transactions that raised $3.95 billion.
Earlier this summer, Musk sold 7.92 million shares between August 5 and August 9, netting a total of around $6.9 billion, taking advantage of a 47% rally in Tesla shares from late May to August 5, when the first sale was made. He sold another $8.5 billion in April.
Musk told Tesla investors last month that he and his investor group were "obviously overpaying" for the social media group, with overall costs pegged at $46.5 billion.
Musk's sales aren't the only headwind Tesla is facing, however, and data from China earlier this week suggests demand concerns in the world's largest car market -- and key Tesla manufacturing hub -- linked in part to the country's 'zero Covid' health policies.
Tesla sold 71,704 cars in China last month, an industry group said Monday, including around 54,505 for export, down from record sales of just over 83,000 in September.
"The longer-term bullish view of Tesla remains generally unchanged as we believe the EV demand and production story are still in the early days of playing out as part of a massive transformation to the auto world," Ives said. "That said, this is a very nervous few months ahead for Tesla investors as they remain the ones that have been punched again and again by the Musk Twitter antics and the stock now is deep in the investor penalty box until deliveries hit in early January and we get a better sense of the 2023 delivery/production trajectory."
Last month, Tesla, which has been raising costs of its U.S.-made cars for much of the year, reduced the starter price of its Model 3 sedan In China by around 5.3%, and cut the cost of its Model Y by 9%, just days after its third quarter earnings reported echoed the impact of rising production costs and indicating narrowing profit margins for the world's most-valuable car company.
Tesla said last month that full-year deliveries may fall just shy of its 50% growth target as it "simplifies operations, reduce costs, and improve the experience of our customers."
