Proactive Investors - Tesla Inc (NASDAQ:TSLA) and its boss Elon Musk are at a ‘fork in the road’, according to a long-time bull on the stock, Daniel Ives.
In a research note, the Wedbush Securities tech analyst said: “Musk controls the fate of Tesla, this is a moment of truth for Musk to navigate the damage control now.......or the brutal pain will continue.”
The ‘brutal pain’ referred to was the sell-off of Tesla's stock on Tuesday that wiped 12% or US$50bn off the company’s market worth in the wake of a disappointing set of fourth-quarter delivery numbers.
Tesla’s update raised concerns about the state of demand for its electric cars, particularly in China where the company has seen significant growth in recent years.
Ives’ research note flagged increasing competition in the Chinese market from domestic EV manufacturers such as NIO, BYD, and Xpeng (NYSE:XPEV) as another potential threat to Tesla’s supremacy.
And it also pointed out that CEO Musk's involvement at Twitter, which he bought last October for US$44bn, has contributed to investor concerns about the future of the company.
In light of these challenges, the research note called for strong leadership from Musk to guide Tesla through the current period of weaker demand.
The Wedbush analyst also advised the company to lay out a clear plan for 2023, including delivery targets and stable margins, in order to give investors a better understanding of what to expect from the company in the coming year.
Despite the challenges currently facing Tesla, Wedbush Securities remains confident in the company's future and maintains its "outperform" rating for the stock.
The research note also keeps its US$175 price target for Tesla, suggesting that the brokerage sees potential for the stock to recover from its recent sell-off and reach new highs in the future.
The positivity echoed the sentiment of tech bull Cathie Wood and her colleagues at funds backed by Ark Investment used the recent weakness in Tesla’s share price to pick up cut price stock. The shares were up 1.3% in pre-market trade on Wednesday.