- Elon Musk has multiple levers to reverse Tesla stock falls
- Tesla shares are down 70% this year
- He needs to find a new Twitter boss, stop selling shares, launch buybacks and strengthen the board
A short, sharp rally has bought Tesla (TSLA:NASDAQ) investors some light relief as 2022 draws to a close. Since hitting two and a half year lows of $109.10 on 27 December 2022, the stock has rallied close on 12% to close overnight at $121.82. That still leaves the shares off 70% this year.
This week analysts at Piper Sandler defended Tesla. The analysts argued that while growth could slow in 2023 due to factors such as a recession, rising interest rates, and ‘tapped-out’ demand, they said: ‘We do not believe that Tesla’s market share is suddenly succumbing to a wave of new competition, and we do not believe anything has changed with the long-term thesis.’
Analysts at Baird have even pitched Tesla as a ‘best idea for 2023’, seeing the stock sell-off as a buying opportunity.
TIPS TO STOP THE TESLA PRICE PLUNGE
So, what should billionaire boss Elon Musk do to rescue the share price in 2023?
Priority number one is to appoint a new chief executive for Twitter so that Musk isn’t spending all his time on the social media network he acquired earlier in 2022.
Musk has acknowledged this requirement but is struggling to draw up a list of suitable candidates. The longer he remains in the Twitter chair the less time he will have to focus on sorting Tesla out, which will undermine investors’ hopes of a Tesla share price recovery.
Musk also needs to put a stop to selling his own Tesla shares, which has really darkened the market’s mood. The Tesla CEO has sold nearly $40 billion in stock since November 2021. Hitting the pause button is now needed, or at the very least, a formal and transparent plan put in place for when he might sell stock in the future.
Some progress has been made on this front after Musk indicated on a Twitter Spaces call just before Christmas that he would not sell any more Tesla shares for at least the next 18 months.
LAUNCH A BUYBACK AND BOLSTER THE BOARD
Given the depressed share price, launching a hefty share buyback would really help lift the mood.
According to Koyfin data, Tesla had about $19.5 billion of net cash on its books at the end of September 2022, so it could afford a $5 billion to $10 billion buyback without hurting investment plans.
Dan Ives, analyst at Wedbush, also believes that Musk should reel-in his typically aggressive growth forecasts for Tesla. ‘Lay out conservative 2023 delivery and targets given the darker macro,’ he wrote. ‘The 50% growth target is not happening in our opinion, with 35%-plus delivery growth a more hittable and realistic goal for 2023,’ the analyst told clients in a note.
Lastly, Musk should bolster its board with people with experience in technology development and electric vehicles.
Baird’s share price target is now pitched at $252, and even the consensus of $248 implies that Tesla stock could double in 2023.
