Elon Musk’s Twitter Distraction Creates a Tesla Stock Discount

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  • Tesla (TSLA) stock was up as much as 10% on Thursday before cooling to end the day with a 3.3% gain.
  • Shares in the EV maker are still down double digits since CEO Elon Musk began his Twitter (NYSE:TWTR) takeover adventure in early April.
  • Telsa’s record quarterly results point to continued growth so investors should buy TSLA stock now while it’s still discounted by the Twitter affair.
The Tesla (TSLA Stock) logo on the side of a building.

Source: Michael Vi / Shutterstock.com

Many mega-cap, tech-focused companies have seen the value of their shares take a hit this year. Tesla (NASDAQ:TSLA) has been no exception. After starting 2022 at the $1,200 level, TSLA stock slid below $765 by the end of February. Shares were rallying nicely through mid-March and the start of April. Then they ran into a complication other companies simply don’t have. That would be CEO Elon Musk. Specifically (at least in this case), Musk’s fascination with Twitter Inc (NYSE:TWTR).   

In the past, Musk’s habit of posting on Twitter have cost him and Tesla dearly. In 2018, Musk was forced to step down as chairman of Tesla after running afoul of the Securities and Exchange Commission over a Twitter post about taking Tesla private. Musk and Tesla were each fined $20 million as well. 

On April 4, TWTR stock soared on news that Elon Musk revealed he had purchased a 9.2% stake in the company. That was just the beginning of a spectacle that has grown to see Musk announcing he has lined up $46.5 billion in funding to buy the social media company outright. During all of this, TSLA stock has been feeling the heat. If you have been considering adding Tesla stock to your portfolio, now is the time to do so, while it’s still discounted thanks to the Twitter drama.

Ticker Company Current Price
TSLA Tesla $989.24

Tesla Reports a Record First Quarter

TSLA stock enjoyed a brief reprieve after the company reported record first quarter earnings.

Revenue of $18.76 billion for the quarter was well above what analysts were expecting to see. In addition, Tesla’s earnings-per-share of $3.22 demolished the $2.26 that had been projected.

Add in positive news like the opening of Tesla’s Gigafactory in Austin, Texas plus new vehicle deliveries for the first quarter that were up 68% compared to the previous year, and you can understand why the market would be reacting positively to the company’s earnings.

While TSLA stock was soaring on Thursday (the day after the earnings report), it ended the day with a relatively modest 3.3% gain.  

Increased Market Share and Margins Despite Inflation and Growing Competition

The good news for Tesla investors goes much deeper than the raw numbers. Dramatically increased revenue and higher than expected earnings are great for shareholders. However, in the case of Tesla, some context is especially important.

For much of its history, Tesla has largely had the electric vehicle market to itself. However, last year marked a point where competition really heated up. Globally, a growing field of EV startups are producing and selling cars. Mainstream automakers are making significant inroads in launching EVs and moving them into volume production. There are now dozens of models for consumers to choose from. Telsa’s performance of dramatically beating its Q1 2021 production numbers and further increasing its market share is all the more impressive because the company is doing so despite real competition.

Let’s look at Tesla’s serious earnings beat. This is also especially impressive because of what is going on in the market. All companies are dealing with inflationary pressure that is making production more expensive. EV makers are having an even tougher time of it than most. The battery pack — by far the most expensive component in an electric car — has been getting far more costly. The prices of key materials used in batteries including lithium, nickel and cobalt have been surging to record levels.

Despite virtually everything costing more, and the cost to produce batteries ramping up, Tesla managed to increase its automotive gross margins to a record 32.9% during the quarter. The company has been able to do so by increasing car prices. However, doing so has failed to put a dent on demand. 

The ability to keep selling as many EVs as it can make — despite raising prices to keep margins up and facing real competition — is a strong indicator that TSLA stock is still on a growth path.  

Bottom Line: Should You Buy TSLA Stock Now?

Tesla’s first quarter earnings have proven that the EV maker is a juggernaut. It’s proving incredibly resilient to economic challenges and impervious to competition. The Portfolio Grader “B” rated stock continues on a long-term growth trajectory. 

That makes the current situation where the TSLA stock price has been collateral damage of CEO Elon Musk’s Twitter adventure a tempting opportunity. If you have been considering buying Tesla stock for your portfolio, now would be the time to do so.  

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/tsla-stock-musks-twitter-distraction-creates-a-tesla-share-discount/.

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