Can a New Twitter CEO Really Save Tesla (TSLA) Stock?

  • Tesla (TSLA) jumped on reports Twitter will get a new CEO.
  • Investors hope CEO Elon Musk will now pay more attention to the car company.
  • Tesla faces a host of new Chinese competitors.
TSLA stock - Can a New Twitter CEO Really Save Tesla (TSLA) Stock?

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Tesla (NASDAQ:TSLA) stock rose 2% on May 11 and another 2% overnight on speculation CEO Elon Musk has found a new CEO for Twitter.

Shares had fallen below $170 each before rumors that Linda Yaccarino, who runs advertising for the NBC Universal unit of Comcast (NASDAQ:CMCSA), will take the Twitter job. The stock was expected to open today, May 12, at about $176. The overnight move added $20 billion to the market capitalization, taking it over $555 billion.

In early morning trading, TSLA stock is up almost 3%.

Musk didn’t mention Yaccarino by name. He tweeted only that he’s negotiating for someone who should be in place in about six weeks. Musk will become executive chairman and chief technology officer.

Musk Attention Suck

Since he bought Twitter last year, the micro-blogging and social media service has proven to be as much of an attention suck for Musk as for its users. At the same time, Tesla faces declining market share, rising Chinese competitors, and quality concerns.

The company recently recalled 1 million cars and is constantly changing prices to manage inventory.

Tesla shares were hammered during 2022’s tech wreck, bottoming at $113 in January. Since value investor Bill Miller shorted it in January, however, it’s up by 60%. At its current price, Tesla is worth nearly three times more than Toyota Motor (NYSE:TM), the world’s largest car company by volume. The price-earnings multiple is over 50, and it sells for nearly seven times its sales, while other car companies are priced at a fraction of their sales.

The bulls have their reasons. Tesla has complete control of its supply chain and sales channel. And Tesla doesn’t need to advertise. The company brings 10% of revenue to the net income line while other EV makers are losing money.

TSLA Stock: What Happens Next?

It’s clear that Tesla investors want Musk to focus full-time on the car company. The debate will continue in the markets as to how much that attention is worth.

On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.


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