Tesla extends decline on Elon Musk tweet, overcharging claims

Electric carmaker Tesla’s shares continued their slump after Elon Musk’s anti-union tweet was ordered to be deleted and, separately, some EV buyers sought refunds.

  • Tesla, Inc (Nasdaq: TSLA) share price loses 1.2% to US$611.29 per share
  • CEO Elon Musk’s anti-union tweet must be deleted, the labour board ruled
  • Mizuho initiated ‘buy’ with a US$775 target as it sees ‘significant upside’
  • But Barclays was bearish, due to Tesla’s declining market share in Europe
  • Trade US stocks with an IG account

Tesla share price sinks

Shares of electric vehicle (EV) leader Tesla fell another 1.2% to close Monday at US$611.29.

They had lost 3.4% last Friday, after the US labour board ordered the California-based company to delete an unlawful tweet by billionaire CEO Elon Musk.

Last Wednesday, TSLA shares received a temporary boost after Musk announced that customers could buy Tesla’s EVs with Bitcoin.

Among 41 analysts, 15 recommended ‘buy’, 14 said to ‘hold’, and 12 had ‘sell’ calls. Their average target price was US$632.03 as of Monday, Bloomberg data showed.

Among the most bullish were Piper Sandler, Wedbush, and Morgan Stanley, targeting US$1,200, US$950, and US$880 respectively. Jefferies on Sunday gave a ‘hold’ rating and trimmed its target price to US$700, from US$775.

Anti-union tweet, overcharging claims weigh on Tesla

The US National Labour Relations Board said Thursday (25 March 2021) that one of Musk’s tweets was illegal and should be deleted.

The tweet, published in 2018, threatened that Tesla employees would lose their stock options if they formed a union.

The labour board backed a ruling from a US labour judge in 2019 that the automotive maker had repeatedly violated the National Labor Relations Act in 2017 and 2018.

Separately, this Monday, CNBC reported that Tesla double-charged some customers for new electric cars, and those buyers were trying to get refunds for the added charges. About US$37,000 to US$71,000 were taken from each affected customer’s account, CNBC said.

What should Tesla investors watch out for?

Rating the stock ‘underweight’ with a US$230 target, Barclays analysts flagged that even though Tesla commands an 80% market share of battery EVs in the US, its share in Europe has fallen to 10% from a peak of 34%.

Competition is also set to intensify - German manufacturers have ‘particularly aggressive’ launch schedules, Barclays said.

These performance metrics ‘should give pause to TSLA bulls’, although most of them ‘likely won’t as long as TSLA trades off of social media mentions and Treasury yields’, Barclays added.

In contrast, Mizuho initiated coverage with a ‘buy’ call and US$775 target, citing ‘significant upside’ as Tesla has less than 1% market share of global light vehicle production (LVP). EVs could grow to 25% of global LVP by 2025, versus 3-4% today, Mizuho wrote.

The firm’s in-house battery supply is also key to its defensible EV leadership, and the fully vertically integrated model and ‘intense focus on ruthless engineering and end-to-end learning’ will drive innovation and lower manufacturing costs, Mizuho added.

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