Tesla sell-off could continue if Musk remains distracted - Wedbush
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Tesla (NASDAQ:TSLA) stockâs stark slide to start 2023 could be a sign of things to come if Elon Musk is not able to effectively lead the automaker, Wedbush analyst Dan Ives said on Wednesday.

Ives noted that deteriorating demand in China is a chief concern for the company and a 
miss on Q4 deliveries understandably drove shares lower. As competition heats up and Chinese consumer strength is eroded, Ives advised that the major growth engine of Tesla in recent years is certainly coming into question.

âWith China representing 40%+ of the global growth story for Tesla this is a heavy concern for the Street which will likely result in more significant price cuts over the coming months to spur demand as a potential pricing war takes place to gain market share in a darker macro backdrop,â Ives wrote. âAs such, this leaves investors with more questions than answers on the Tesla story with global demand into an uncertain 2023 a stark contrast to the Cinderella story Musk & Co. have seen in China over the past few years which has catalyzed the Model 3/Y demand story.â

He added that the Twitter (TWTR) distraction amid the demand deceleration has created a âperfect stormâ for the stock that could stoke further declines. Ives noted that many Tesla investors are questioning whether Musk is âasleep at the wheel while focused on Twitterâ and are nearing their breaking point as quarterly reports fall short of lofty expectations. 

âVery simply, this is a fork in the road year ahead for Tesla that will either lay the groundwork for its next chapter of growth OR continue its slide from the top of the perch with Musk leading the way downhill,â Ives concluded.

In his assessment, Ives remained optimistic about the course being corrected in 2023. He maintained an Outperform rating on the stock and a $175 price target.

âWith $5+ of earnings power still hittable and the stock in free fall, we do not believe now is the time to bail on the stock and view it as way oversold on fears of the unknown around the corner,â Ives explained. âHowever, now Musk & Co. needs to lay out hittable 2023 target and delivery numbers with stable margins, stop selling stock and document this on the next earnings call, and finally name a new Twitter CEO so the distraction/attention risks around Tesla start to abate.â
He warned that if these steps are not taken, âbrutal pain will continue.â Shares of the Austin-based EV manufacturer rose 1.39% in Wednesdayâs premarket trading, rebounding from a plunge to a new multi-year low on Tuesday.