Tesla Stock Soars as Twitter Overhang Disappears: What’s Next for Investors?

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Investors who have been eagerly waiting for Tesla’s Twitter overhang to be resolved can finally breathe a sigh of relief. The cloud of uncertainty surrounding the company’s CEO and his Twitter activities has dissipated, allowing investors to shift their focus towards the future.

Tesla’s stock, listed as TSLA, experienced a positive trajectory on Friday, closing at $180.14, representing a 1.8% increase. In contrast, the S&P 500 and Nasdaq Composite experienced minor declines of 0.1% and 0.2% respectively. This recent gain has pushed Tesla shares up by approximately $12, or around 7%, since Elon Musk tweeted on May 11 about appointing a new CEO for Twitter.

Throughout the week, Tesla’s shares witnessed a steady rise of over 7%, largely influenced by the company’s annual meeting of shareholders. During the meeting, Musk reassured investors of his unwavering dedication to leading his car company.

Investors were relieved to finally see the appointment of a new CEO for Twitter, as it served as a catalyst for Tesla’s stock. Elon Musk had previously conducted a Twitter poll in December, asking whether he should step down as CEO of the social media platform, and 57.5% of voters responded with “yes.”

After a few months, Linda Yaccarino has now taken charge as the CEO of Twitter. Gary Black, co-founder of the Future Fund Active ETF and a Tesla shareholder, believed that the appointment of a new CEO could boost Tesla’s stock by 3% to 5%, equivalent to a value of approximately $5 to $8 per share. On the other hand, Wedbush analyst Dan Ives expressed a more optimistic view, suggesting that a new CEO could add a value of $15 to $20 per share. Currently, the stock has experienced a price increase of around $12, which falls between these two estimations.

However, it would be unreasonable for Tesla investors to expect further substantial gains. Prior to Musk’s involvement with Twitter in October, Tesla’s stock was trading at around $225 per share. Currently, the stock is approximately 20% below that level. Various factors unrelated to Twitter, such as multiple price cuts by Tesla worldwide, have impacted profit margins and influenced Wall Street earnings estimates for 2023 and 2024.

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In addition to Tesla, other automakers have also faced challenges due to higher interest rates impacting vehicle affordability. Ford Motor (F) stock, for example, has experienced a decline of approximately 10% since October.

Now, investors will need to seek out other catalysts to drive Tesla’s stock. Gary Black has identified several upcoming events, including the Federal Reserve pausing rate increases, which he expects to occur in the third quarter. Additionally, the launch of the Cybertruck is scheduled for the second half of 2023, and Black anticipates a Tesla stock buyback in the fourth quarter.

Before these catalysts come into play, Tesla will release its second-quarter delivery and earnings reports. Deliveries are expected to be announced on July 2, with analysts anticipating around 445,000 units delivered, an increase from approximately 423,000 units delivered in the first quarter. Earnings results will follow a few weeks later, with analysts projecting earnings per share of approximately 80 cents and operating profit margins of about 11%.

From a technical standpoint, Tesla’s stock is currently trading above its 50-day and 100-day moving averages. Frank Cappelleri, founder and technical analyst at CappThesis, suggests that the recent rally in Tesla’s stock may encounter resistance between the $180 and $190 per share range. Cappelleri bases his analysis on stock charts to gain insights into investor sentiment and behavior.

Investors should be prepared for a potential pause in Tesla’s stock’s momentum. It is likely that they will wait until the delivery report is released in a few weeks before making further adjustments to their Tesla positions.

The future movement of Tesla’s stock, whether it can surpass the $190 mark or test technical support around $155, will largely depend on the company’s upcoming reports in the coming months. Investors will closely scrutinize the information provided by Tesla to gauge the company’s performance and make informed decisions about the stock.

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