Investors waiting for Tesla's Twitter overhang to lift don't have to wait anymore. It is gone.
Investors can feel relieved they got their CEO back. Now they can start thinking about what comes next for the company and its stock.
Tesla shares closed at $180.14, up 1.8% Friday while the S&P 500 and Nasdaq Composite dropped 0.1% and 0.2%, respectively. With Friday's gain, shares are now up almost $12, or about 7%, since Musk tweeted out on May 11 that he had found a new CEO for Twitter.
For the week, shares rose more than 7%, boosted by the company's annual meeting of shareholders where Musk reaffirmed his commitment to running his car company.
That was a relief for investors and a new Twitter CEO was the stock catalyst they were waiting for. In December, Musk ran a Twitter poll asking if he should step down as CEO of his social media platform and 57.5% of voters clicked "Yes."
It took a few months, but now Linda Yaccarino will take the reins at Twitter. Future Fund Active ETF $(FFND)$ co-founder Gary Black, also a Tesla shareholder, believed a new CEO was worth 3% to 5% for Tesla stock, or about $5 to $8. Wedbush analyst Dan Ives was a little more bullish, saying a new CEO could be worth $15 to $20 a share. Splitting the difference between the two works out to about $12, which is what has already happened.
It would be a little greedy for Tesla investors to expect more. Tesla stock was about $225 a share before Musk took over Twitter in October. Shares are still roughly 20% below that level, but a lot of non-Twitter things have happened. For starters, Tesla has cut prices around the globe several times, pressuring profit margins along with Wall Street earnings estimates for 2023 and 2024.
Other auto makers have run into headwinds, too, as higher interest rates put pressure on vehicle affordability. Ford Motor $(F)$ stock is down about 10% since October.
Now investors need to look for other catalysts. Black is looking ahead to a few including: the Fed pausing rate increases, which he believes will happen in the third quarter, the Cybertruck launch coming in the second half of 2023, and a Tesla stock buyback, which he says could come in the fourth quarter.
Before those three things are likely to happen, Tesla will report second quarter deliveries and earnings. Deliveries will likely come on July 2. Wall Street is looking for about 445,000 units, up from about 423,000 delivered in Q1. Earnings will follow a few weeks after that. Analysts are looking for earnings per share of about 80 cents and operating profit margins of about 11%.
Technically, Tesla stock is now above its 50-day and 100-day moving averages. CappThesis founder and technical analyst Frank Cappelleri says the recent Tesla rally could stall out between $180 and $190 a share. He isn't making a fundamental call. He's looking at stock charts to get a sense of what investors are thinking.
Don't be surprised if Tesla stock pauses. Investors will likely wait until deliveries come out in a few weeks to tweak Tesla positions further.
Whether Tesla stock can break above $190 or retests technical support around $155 depends on what the company reports in coming months.
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