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Tesla Stock Gains As Musk Closes Twitter Margin Loan; Jefferies Cuts Price Target

"We are clearly witnessing an uncomfortable pile up of negative news (for Tesla) from ratings to polarizing political opinions and ethical questions," said Jefferies analyst Philippe Houchois.

Updated at 12:10 pm EST

Tesla  (TSLA ) - Get Tesla Inc. Reportshares moved higher Thursday after CEO Elon Musk closed out a margin loan linked to his $44 billion takeover of Twitter  (TWTR) - Get Twitter Inc. Report, although gains were capped by a price target cut from analysts at Jefferies.

In a Securities and Exchange Commission filing last night, Musk said he's reduced his margin loan linked to his Tesla shares to zero, while boosting the overall equity portion of his takeover to $33.5 billion, in a move that could reduce the overhang on Tesla shares, which are down 42.7% since he first made his holding in Twitter shares public on April 4.

Jefferies analyst Philippe Houchois, meanwhile, lowered his price target on Tesla by $200, to $1,050 per share, and trimmed near-term revenue, margin and profit forecasts amid what he called an "uncomfortable pile up of negative news" that has raised the risk profile for the clean-energy carmaker.

"'Enemy inside' and 'Tesla bigger than Musk' is how we have for years framed the risks from Tesla's unconventional leadership and weak governance," said Houchois. "It is hard to isolate factors behind the recent correction, from Nasdaq to Twitter financial commitments and China lockdowns, but we are clearly witnessing an uncomfortable pile up of negative news from ratings to polarizing political opinions and ethical questions." 

"His personality suggests resolution depends on him alone," Houchois added.

Tesla shares were marked 7.5% higher in early Thursday trading to change hands at $708.05 each, a move that would still leave the stock down more than 32% since the start of the year.

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Houchois sees Q2 deliveries of around 275,000 units, down from a record 310,00 over the first three months of the year, as a near 30-day disruption at its key Shanghai plant, as well as a slower ramp-up in Austin, holds back output. Revenues will slide 15% from last quarter to $16 billion, Houchois said. 

Reuters reported earlier this week that Tesla won't return to its full daily output of 2,600 vehicles in Giga 3, the group's lynchpin Shanghai factory, until Tuesday, as it continues to struggle with staffing and parts availability linked to the city's recent Covid lockdown. The plant had expected to be back to full-speed as early as today.

Shanghai's improving Covid case rate, however, suggests Tesla could be up-and-running at its full weekly capacity of 16,000 units fairly soon, as new infections in China's biggest city fell to a two-month low of 622 on Monday.

Recent data from the China Passenger Car Association (CPAC) showed Tesla produced just 10,757 cars in the world's biggest market last month, selling just over 1,500 and exporting none, thanks to a 22-day closure of its Shanghai facility during the city's Covid lockdown.

The April tally is the lowest in 2 years and compares to a sale total of 65,814 in the month of March. Overall car sales in China fell 35.7% from last year in April, the CPCA said, the biggest single-month decline since the pandemic trough of March 2020.

The clean-energy carmaker is also looking at a multi-million impairment charge linked to its $1.5 billion investment in bitcoin, which it purchased last year under the direction of Musk and his view that the cryptocurrency is "really on the verge of getting broad acceptance" by both mainstream investors and the broader business community.

Estimates of Tesla's bitcoin carrying costs vary, but the timing of the purchase suggests a level of around $32,600. That value, of course, surged in the latter half of 2021, when bitcoin hit an all-time high of around $67,000, but now looks far more fragile after briefly crashing below the $25 level earlier this week.

Bitcoin prices were last seen trading 1.7% lower on the session at $29,003.40 each, a move that leaves the world's biggest cryptocurrency down 36.3% for the quarter.