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Morgan Stanley says Twitter sentiment needs to turn to stop Tesla’s $500 billion slide

Tesla investors need to hope for calmer waters at Twitter in order to stop the the electric vehicle stock’s sharp slide, according to Morgan Stanley. Widely followed analyst Adam Jonas said in a note to clients on Wednesday that Tesla CEO Elon Musk’s management of Twitter, which he recently purchased for $44 billion, is hurting the value of his automaker in the eyes of Wall Street. “We see the situation at Twitter potentially exposing Tesla to risk along a number of areas including: (a) consumer sentiment/demand, (b) commercial partnerships, (c) government relations/support; and (d) capital markets support. While difficult to quantify, we believe there must be some form of sentiment ‘circuit breaker’ around the Twitter situation to calm investor concerns around Tesla,” the note said. The price of Tesla’s stock has been cut more than 50% since Musk first revealed a stake in Twitter in early April. Morgan Stanley said the stock has erased $500 billion of market cap in just the last two months. One issue for Musk is that several major companies have announced that they are halting advertising on Twitter, with the support of civil rights groups. To be sure, Tesla is not the only growth stock that has struggled in recent months. The Invesco QQQ Trust is down about 21% over the same period. Other major auto stocks have also retreated. Jonas said that the global growth of electric vehicle supply is starting to overtake new demand as many countries in the world look poised for a recession. Morgan Stanley maintained its overweight rating and $330 per share price target on Tesla. That represents upside of nearly 95% from where the stock closed on Tuesday.

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