Tesla’s (TSLA) annual shareholder meeting has come and gone, and investors now want to know what the next catalyst for the stock will be. The meeting comes on the heels of last week’s announcement that Linda Yaccarino, a former NBCUniversal ad executive, had been appointed as Twitter’s new CEO.
Tesla CEO Elon Musk’s $44 billion purchase of Twitter, which was financed by in part by Musk’s selling of Tesla stock, was seen as a risk to Tesla shares. Investors also questioned Musk’s ability to effectively lead both Tesla and Twitter while also running rocket company SpaceX. When the Twitter deal closed on October 28, Tesla stock traded at $228.52. Two months later, the shares made a low of $108, losing some 52% of their value.
After falling 70% in 2022, the shares are up 46% year to date, besting the 8% rise in the S&P 500 index. Just as impressive, since reaching 52-week low of around $101, the stock has surged more than 104% to $207 on March 31. But since that $207 level, the shares have lost 13% to Friday’s close. With the Twitter overhang now gone, and the annual shareholder meeting in the rearview mirror, what’s next?
On Tuesday, the annual shareholder meeting was held and several new developments emerged, many of which seemingly excited Tesla investors. The shares closed on Friday at $180.14, rising 1.8%, compared to a decline of 0.1% and 0.2% for the S&P 500 index and Nasdaq Composite, respectively. With Friday’s gain, Tesla stock has risen roughly 7% this past week after Musk reaffirmed his commitment towards leading his electric car company, dispelling rumors of his departure.
While there are differing opinions on his style of leadership, Tesla shareholders recognize Musk’s importance for the company as CEO. His presence alone and strategic vision presents a competitive advantage over traditional automakers, many of which lack the ambitious projects and product roadmap Musk has under development, including artificial intelligence (AI) for Tesla's commercial applications. Tesla’s AI initiatives is crucial not only for the company’s Full Self-Driving (FSD) technology, but also the Optimus robot, which was highlighted during the shareholder meeting.
From manufacturing to customer service, the Optimus robot can automate a wide range of tasks, making it a potential game-changer within the AI industry. Not only can it improve productivity in wide range of applications, but it can also address labor shortages in several industries, thereby making it immediately valuable to Tesla. During the meeting, the company also hinted at a strategic shift towards traditional marketing, which it has resisted since its founding.
Unlike traditional automakers, which have allocated significant budgets to marketing, Tesla has instead relied on word-of-mouth and its strong brand reputation, devoting zero dollars on traditional advertising. This approach has worked, catapulting Tesla to become one of the worlds most valuable companies. Musk, however, said during the meeting that there would be some experimentations with advertising.
Tesla has enacted a series of price cuts this year to increase demand and boost market share. So it remains to be seen whether this pivot towards traditional advertising, which may impact profit margins, will help the company achieve its desired growth outcome. Elsewhere, Tesla also talked up its highly anticipated Cybertruck, which the company said remains on track for production to begin later this year at its Gigafactory in Texas. Tesla is targeting up to 10,000 Cybertruck deliveries this year.
The company also talked about its Robotaxi service, though it was limited on specific details, while also mentioning the success of its energy storage segment, which has begun to outpace the automotive sector. Tesla’s ability to innovate and its awe inspiring cutting-edge technology has catapulted it to become the dominant player in the electric vehicles market. Its annual shareholder meeting seems to affirm its increased focus on its growth strategy. As such, Tesla stock remains a buy opportunity with the potential to reach $220, returning 22% in the next six to twelve months.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.