Someday there will be a book written on how just a few words on Twitter can dramatically move a stock. The lead example will most likely involve Tesla Motors (NASDAQ:TSLA), which saw its shares jump almost $10 in early Monday trading after the following tweet from CEO Elon Musk over the weekend:
(Source: Elon Musk Twitter account)
Next month will mark the ten year anniversary of the "Secret Tesla Motors Master Plan," a blog post you can read here. Many will argue the successes and failures of this initial plan, like reduction of power plant emissions and the second model supposed to be priced at half the cost of the $89k Roadster.
In recent years, Tesla's (and Elon Musk's) credibility has taken a hit after a number of questionable decisions and financial failures. Recently, the company missed its second quarter delivery and production targets, which will likely end up leading to a third straight year of the company missing its delivery guidance. We've also seen a number of projections for non-GAAP profitability, cash flow, and capital raises that have completely flopped.
With Tesla's share count rising by the quarter, and about to soar even more if the SolarCity (NASDAQ:SCTY) deal goes through, even analysts are starting to question the company's value. Price targets are being cut further, with the median street target now below where the stock currently trades. For all of those thinking this stock was going to the moon, shares are actually down over the past two years!
In the past month or two, management has been under fire for a couple of issues. The first is regarding questionable NDA agreements and reporting to automotive authorities. The second is regarding potential crashes involving Tesla's autopilot feature, and on Monday morning a third potential crash report surfaced. I recently lost a bit of respect for the company and its CEO when they trashed Fortune for a "misleading article", yet the company itself couldn't get its own facts together regarding what happened.
As Tesla shares rally on Monday morning, I hope Elon Musk's second master plan includes regaining credibility. The company continues to miss yearly guidance, shareholders are being constantly diluted, and analysts are slashing price targets. For such a technologically advanced company, Tesla can't even get its website to work right, which basically shows it is misleading consumers. I am hoping that the second part of Elon Musk's Master Plan involves more transparency, although I remain skeptical. For all of the hype regarding Tesla, shares have declined over the past two years, so regaining credibility could be key to reversing that trend.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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