Elon Musk ‘needs to look in the mirror’ and turn focus back to Tesla, analyst says

Wedbush Managing Director & Senior Equity Analyst Dan Ives joins Yahoo Finance Live to discuss Tesla's uncertainty amid Elon Musk's Twitter takeover and antics, third-quarter earnings for Polestar, and the outlook for EVs.

Video Transcript

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- Tesla bulls are taking their foot off the gas for the car company's stock after Elon Musk sold a large block of his equity while he looks to radically change Twitter. Wedbush analyst Dan Ives taking a hard stance on Musk's move, saying Tesla is in a purely painful, dark situation, and that Musk has managed to do what bears have tried for years, cutting his price target to $250. Wedbush analyst Dan Ives joins us now. Dan, you've had enough.

DAN IVES: Look, I mean, I think the clock struck midnight on the frustration. And it's gotten to a point where Musk needs to look in the mirror and ultimately, now, refocus back on Tesla. And I think for Twitter, it's really been using Tesla as an ATM machine and the PR antics, our worry is that it hurts the brand.

It hurts the brand of Tesla. Musk is the brand. And this has just been a circus show that, in almost a torturous way, just continues to get worse.

- Dan, we've gotta change that profile pic on your Twitter account. We need one of me and you a former analyst and a current analyst making big calls on Tesla here. What would get--

DAN IVES: Let's do it.

- Let's do it. What would get you to go back and upgrade this stock?

DAN IVES: Look, I mean, we still have a buy rating, $250 price target. But the reason we took it off Top Pick list was because in the near term, it's going to be hard for the stock to significantly outperform till this Twitter black cloud ultimately clears in what's still a jittery environment for risk-on. And I believe that Tesla is still on pace for a very strong Q4, and, obviously, the long term bull thesis is unchanged as we look out at the next year or two. But look, this has gotten to a tipping point, and I think it's really a moment of truth for Musk to now refocus back on the golden child, Tesla, because Twitter it's essentially the Tom Hanks money pit movie. And that's part of the problem.

- Dan, I don't know if you heard, we just had our senior auto correspondent Pras Subramanian on talking about the really good quarter from Polestar. Are we at that point where the likes of Polestar or Lucid are finally taking market share away from this company? We've been hearing about that argument for four years, but it seems like that moment is now.

DAN IVES: Well, I wouldn't necessarily say it's a market share. I think what's happening is there is significant ramp-up in EV buying behavior, especially in the US. You look at Polestar, you know, I think they're going to have clear success. And it's a rising tide lifting a lot of boats.

I think what you're starting to see, especially in the US, 2 and 1/2% of autos are EVs. You go to China, it's 12%, 13%. There's a massive ramp here in the US. I think-- and again, the 313 area is going to be benefited significantly in terms of with GM and Ford. And I think those are significant years ahead for what I view as renaissance stories.

- Dan, when you think about not just the competitive environment, but how Tesla is operating itself right now, even with the attention that Elon Musk is giving to Twitter this point in time, is it a good scenario for Tesla to be able to kind of just focus without having Elon Musk kind of breathe down the necks of people over at Tesla? Or is that a net beneficiary to the brand in Tesla when you do have Elon Musk that is on the factory floor, that's in people's faces and making sure that he's also visible throughout the entire production experience?

DAN IVES: Yeah, but this would be like Cook being in the Galapagos Islands while Apple is going through a supply chain issue in China. You know, so that's part of the problem, is that Tesla needs Musk more than it ever has. It's a very significant period, the next six to nine months. And the issue is that the antics we've seen on Twitter-- and you've seen it from an advertising perspective-- it's a brand destruction. That's the biggest problem.

And you know, ultimately, Musk is the brand of Tesla. And that's why it was one thing in terms of selling stock, but now it's started to bleed over. And that's why, you know, for us, it was time, enough is enough, to sort of come out there and make a statement. Because in my opinion, it's impacted the stock.

- OK, so something else that's impacted the stock as well is where Tesla has also taken on different holdings. And we're gonna kind of go broader with this in the second, but Tesla still has how much Bitcoin on its balance sheet? And how does that impact the company in the near term, too?

DAN IVES: Yeah, well, they've taken down a lot of that. In other words, like if you look in terms of some of the write-downs, that's pretty minimal today. Now, obviously, look, you know, it started off as a bigger bet in terms of where it was going to go, and that ended up being a positive that they didn't go all-in. But I think for Twitter, that's less-- for Twitter, that's less of an issue here in terms of any sort of contagion or relative to what that does to their balance sheet.

- Dan, I know you cover a lot of stuff, and we always talk to you about big cap tech names. Just what do you think about what has happened this week in cryptocurrencies? This is something not a lot of, I would say, investors have seen before, and frankly, a lot of analysts haven't seen this before either.

DAN IVES: But it's a Black Swan event, right? And in other words, like I think like anything, this is a cautionary tale for what you see in sectors. And unfortunately, many will feel the pain.

I do think what's important is that the contagion, the quote, unquote "systemic risk," is not bleeding into the overall financial system. And I think that that's very important because that's always been a broader fear here. But look, this is-- it's some very, very dark days in terms of some of these very, very unfortunate things that we're seeing there with FTX.

- So this is a broader week that we've had a lot of focus thrust on crypto, but also in tandem just FinTech. And whether that's DeFi or TradFi FinTech, you've got some traditional companies out there-- more traditional in the tech landscape, I suppose-- that are also trying to get into FinTech. And one of those is in your coverage universe in Apple. Is there any net beneficiary when you have a downfall, or a windfall, or rather Black Swan type of event in crypto that a FinTech play for an Apple can see as a result of it?

DAN IVES: Because I think when the new kids on the block fall off the stage and they disappear, who's left? It's the stalwarts. It's the Apples, the PayPals, the Squares. And those are the ones that are going to benefit.

And I think they will benefit down this road in terms of, I think, more and more, the stalwarts that, you know, will be the ones that ultimately, you know, take significant share. But I also think it shows why companies like Apple have kind of been very cautionary in terms of going down this path. There's still a lot of pitfalls ahead, and the last thing you want to do is get into a quicksand moment.

- Dan, we've got some viewers of the show chiming in. They want to know if you're gonna go to Bill Pickle's Tap Room this weekend. We see that we've got the PSU Dan Ives NFT present on screen today.

DAN IVES: Oh, yeah. I mean, look, I think I will be visiting there. And it's always fun in State College for a weekend.

- This guy's a [INAUDIBLE]. You can just talk about anything. Enjoy your weekend, my friend.

Wedbush analyst Dan Ives, always nice to see you. We'll talk to you soon. I'll catch you on Twitter, my man.

DAN IVES: Thank you.